Keyword bidding strategies: When to raise your cost per click bids

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CPC bidding: This once-powerful tool for search marketers has slowly been relegated to the sidelines in favor of hyper-intelligent machine learning algorithms and the power of the almighty “G”.

This may sound like bit of an exaggeration, but soon enough, manually altering our bids to improve performance will be a thing of the past. You can read more on my thoughts about the future of PPC automation here, if you’re interested. But for the time being, we still do have control, so we have to make the most of it.

How do we make best use of our bids in AdWords and other search marketing/advertising platforms? What insights can we gain from our bids and when, most importantly, should we be raising our bids? There are a host of automated bidding strategies that Google has made available to advertisers (eCPC, Target CPA, etc.), but those all leave something to be desired, and often underperform in comparison to manual bidding.

So, let’s review how we can analyze our account, and the manual changes we can make to improve our bidding.

Analyzing performance

Before we dive into strategies for directly altering our bids, we first need to take the lay of the land and start analyzing the performance of individual campaigns, and your overall account. We can start by looking into the following account metrics:

  • Average Position
  • Auction insights
  • Impression share
  • Demographic performance

Each of these metrics can yield their own particular insights, and by fully grasping what each metric means for your account, you can start to make effective changes to both your individual bids and your overall strategy.

Average position

The simplest of the metrics, Average Position has been a key metric for ad bids for ages. Average Position is where your ad stands among the other ads that will appear on a page — you can think of Average Position as a proxy for your overall Ad Rank, which is the metric Google uses to determine the order of ad placements

Whether it’s a demanding client looking to make sure they’re always in the top position, or someone who refuses to take the to spot because it’s too expensive (despite it being more profitable), there are a lot of factors to consider. It’s been widely understood for a while that position #1 isn’t always the most efficient when it comes to Cost Per Acquisition (CPA). With that said, the benefits of attaining that top position can go far beyond an efficient CPA. Depending on how your team is performing attribution-wise, Google Ads doesn’t always give the full picture.

Maybe you’re winning more in organic while sitting at position one for paid; or, maybe your retargeting program is beefy enough that even when you know you won’t always convert on first visit, you’re still happy to get the traffic as you’re effective at converting high-funnel visitors via retargeting.

Segmenting your traffic using the Top vs. Other segment is a quick and easy way to start diving into analyzing performance by position:

When it comes to analyzing performance by position, your approach should be two-fold — first, diving into the account, looking at conversion rates, ROAS, etc. by position historically, and then comparing bottom-line revenue for the same periods of time. The latter is often easier said than done, but if you learn that, for example, sitting in position 3 for your most expensive queries improves ROAS significantly by reducing your average CPC, that’s a win for your marketing team.

But hat’s important to note here is that any potential improvements in ROI based on savings made in a lower ad position could be outweighed in the long term by a loss of overall traffic. (See the comment about retargeting from before.) Paid search is all about balancing efficiency over time, and a win in the short term doesn’t always mean a win in the long one.

Auction insights and impression share

After diving into average position, it’s time to pull up the Auction Insights report and deal with one of the more troublesome features in Google Ads (as of the time of publication). The Auction Insights report can tell you what other advertisers are bidding on the same keywords as you, how often you’re winning in the auction, how often you’re losing in the auction, and why (“Impression Share (IS) lost to rank”, “IS lost to budget”). My biggest complaint here is that we still don’t have the option to compare auction insights over time (if we wanted to compare competitor impression share, for instance). You can, however, add in custom columns to the main campaign in order to view and compare IS metrics that way:

To start, when looking at Impression Share and how it may affect your bidding decisions, it’s likely you’ll want to be sitting at 100 percent impression share for all your brand terms all the time. If you’re not, you should look into why and address the necessary issues. (We’ll talk more on IS lost to rank and budget in a moment.)

For lower-intent queries, your overall IS can drop slightly and still perform well, but that’s going to be dependent on your analysis of historical performance based on the combination of position and IS. Impression Share lost to rank is one of the most important metrics here as this indicates how often you’ve lost in the auction due to low ad rank. There any number of strategies to correct this (working on ad copy, landing pages, your website, keyword selection), but if all of those are solid, the next place to look is your bid.

When looking at a significant IS lost to rank, when all other ad rank variables have been taken care of, increasing bids is always the next move.

The Auction Insights report will also give you insight into IS lost to budget, which you can fix by dropping bids (if possible) or by just raising your budget. Ideally, none of our accounts would ever sit at a limited budget if they’re profitable, but that’s often not the case with smaller clients or campaigns. In situations like this, it can often be disadvantageous to raise bids, as you’ll be decreasing your IS. If this is the boat you find yourself in, it’s important to make slow, incremental changes while also analyzing what’s working best.

Demographic performance (and more)

We’ve already touched on looking into historic average position and conversion rates, as well as total volume by position, but we can dive deeper when it comes to segmenting performance for different demographics. Are we seeing more traffic convert from a particular zip code over another? Are we seeing increasing search volume during certain times of the day? Are layered interest groups outperforming general traffic?

All of these insights play into your Average Position and Impression Share, but you’ll often see a clearer picture when looking at your audiences or location targeting. If you’re seeing trends like certain zip codes (or cities, or states) outperforming others, or particular times of day getting more competitive, increase your bids here to maintain IS all day and to maximize high-quality traffic to your site:

While bids historically have been one of the most effective tools in the search marketer’s arsenal, they’re quickly becoming one of the least-used, and that will only become more true over time. We didn’t even get into bid management tools like Marin or Kenshoo, which make bid management of large accounts even easier, but the general approach is still the same.

And if you’re looking for a call tracking solution that works seamlessly alongside your AdWords and CPC efforts, you can start today: Request a free personalized demo of CallRail, or sign up for a two-week free trial.


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