05/21/2022

Best PPC Bid Management Strategy: Tips To Increase Conversions

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Regularly managing your PPC bids is crucial to ensure campaign success.

You will get the most out of your advertising dollars if it is done right.

Announcement about the advertising budget

Your company will be more profitable, have more money and can rule it forever as a happy dragon on top of a heap full of gold.

Most advertisers have sufficient knowledge of ad platforms and all the bidding options. Bid management is one of the most complicated PPC processes.

Don’t worry! This article will explain PPC bid management. These tips can also be used to improve your business.

What’s Pay Per Click Bid Management?

PPC bid management is the process of reducing and raising keyword bids. The ultimate goal should always be to maximize your advertising budget.

Before we move on, I’ll cover some metrics that are recurring and relevant to bidding strategies. (Get ready to hear some ).

CPC

Cost per Click (CPC) is a system where you pay per click to drive traffic to your website. 

When you bid on CPC campaigns, you can set a maximum price. CPC refers to the maximum amount you will pay per click for an ad.

Google Ads Max CPC

These are some facts you need to know about CPC bidding

  • There are exceptions to the maximum cost per capita (using bid adjustments and Enhanced CPC).
  • Certain factors may lower your average CPC . This could be even lower than your maximum CPC.
  • CPC bidding can also be called pay-per-click (PPC) bidding.

CPC is a good option if your primary focus is on sales or website traffic.

CPM

Cost-per-thousand-impressions (CPM) is a bidding method where you pay for every thousand times your ad appears on a webpage (an impression). Impressions are how often a user interacts with your advertisement.

Similar to max. Google can give you an estimate of the maximum price you can pay for 1,000 impressions. 

If your goal is brand visibility or brand awareness, you might consider using CPM.

CPA

CPA (cost-per-action) is the last PPC metric we will be covering. You can also refer to it as cost per acquisition or cost/per conversion.

CPA bidding lets you only pay for conversions. 

Conversion actions with Google Ads

Every campaign that you create can include an action. 

CPA Calculation

CPA simply means the campaign cost divided by the number of actions. CPA is the sum of five conversions you measure and $200 spent.

Each campaign should have a single action. This is because actions can have different values. It’s important to be able to calculate the value of each campaign action. 

These are the most important things to remember when considering CPA bidding strategies

  • These are great accounts with stable campaigns that are well-managed
  • Target CPA will be better than Max CPA for those who need to reach specific CPA goals.
  • Without a lot of data, CPA bidding can prove very expensive. Make sure you understand the campaign’s requirements before you consider this option.

CPA is a good option if you are looking for lead conversion, cost-effectiveness and efficiency.

Factors That Impact PPC Bid Management

We don’t expect you to manage bids around the globe randomly. 

1) Historical data

Historical data should be used to inform bid management decisions, regardless of whether automated or manual bidding is used. Many methods can be used to track campaign performance.

No budget? Low results? It is impossible to have used historical data.

Historical data is a great way to identify trends based on different factors like seasonality and competition. 

Campaigns can also be started with historical data (more information later). Based on the data you have accumulated through manual data, your ad platform can tell you where to spend your money and how much you should spend to achieve your campaign goals.

2) Conversion Tracking

Conversion tracking lets you track what happens to a user when they interact with your ad.

You need to track conversions if you want to improve conversion rates and lower campaign costs. Conversion data is crucial to understand how to move them through each stage.    

Potential PPC Funnel

Conversion tracking can be a powerful tool for many reasons.

  1. Calculate your return on investment (ROI).
  2. Use Smart bidding strategies
  3. Analyze customer behavior to gain insights into your PPC funnel

These factors will help you improve your bid management. How do you make sure you have the correct conversion data?

Conversion tracking. How to use it

Conversion tracking is possible in two ways:

1. Definitions of conversion actions

You must first determine the conversion actions. This has been mentioned before.

  • Website actions refer to actions that occur on your website. These actions can include filling out forms or making a purchase.
  • Phone Calls: Calls made directly through your ad or clicks to your company number.
  • App actions: In-app purchases or app installation
  • Import: This is for the person who clicks on your search ad but converts offline.
  • Local actions : Interactions for a specific store or location

2. Tracking

The action type can determine which tracking method is used.

  1. Cookies tracking – You can add a code snippet to your landing page or website and place a tracking tag there.

  2. Call tracking- Each campaign has a unique number. Campaigns can track calls and be attributed to the correct campaign.

  3. Promo codes: You can assign a unique code for promotional campaigns. Google tracks code redemptions at checkout.

  4. It is not possible to track conversions backwards to clicks. You can’t always track conversions back to clicks (e.g., lead generation funnels).

To track users’ movements through your PPC funnel, you can use the data

3) Quality score

Google assigns a score between 1-10 for each keyword in your account. How is the assessment calculated?

  1. Expected click-through rate (CTR).
  2. Relevance
  3. Landing page experience

Officially, Google’s Quality score is affected by factors like historical performance and keyword relevancy.

Quality Score Components

It can be easy to think that quality scores are unrelated to keyword bidding.

What does this mean for bidding? Higher quality scores can indicate that each click costs less than your limit for these keywords. More revenue potential is possible with a higher click value.

Your quality score will also affect your ad rank: Quality Score xCPC bid = AdRank

Bonus tip: Sometimes increasing your quality score (and decreasing the average CPC per keyword), can be a better method to maximize your advertising spend than changing your bid management. 27 Tips to Increase Your Quality Score

4) Avg. Keyword CPC

The average keyword CPC is the average cost per click of an ad. It can be seen in the “Avg.” section. If you have campaigns, the CPC column can also be found in Google Ads Campaigns Menu.

Google Ads Avg. CPC Column

Prices for CPC vary across industries and verticals. These prices reflect the price that advertisers are willing to pay for high quality keywords.

Avg. CPC & Ranking

Average Cost per click (CPC) also means that advertisers can bid higher to secure those top spots.

Always check the Impression share column of Google Ads within a few day of starting a campaign. If your impression share is too high, it could indicate that you are over-bidding.

Bonus tip: You can use Google’s keyword planner to search for potential keywords and their search volumes. We’ll talk about how to set bid amounts.

Budget

Budget is the last thing you should consider. Good bid management will help you achieve the best results from what you have.

The budget impact on bid management is illustrated by Adposition. If you don’t have enough budget, it’s easy to exhaust your resources and get less conversions. 

Oops…

Your PPC budget can also affect performance in other ways.

  • Maximum length of your ads
  • How many keywords do you want to rank?
  • Which products or services would you like to advertise?
  • The CPA you can afford
  • How fast you can get traffic to your site and data to adjust bids

While you may not have total control over your budget, You can manage how fast you spend it and what results you get.

Bonus Tip PPC management companies are well-versed in bid management scripts and rules.

Set Bid Amounts

We’ve already discussed the metrics you need to consider when managing your bids. But how do you decide which amount will get you the desired results? This is how we will examine the process.

Bid Research

It is not a good idea to be concerned about being misled. You shouldn’t be too concerned about being misled.

Based on the vertical, keywords will have an average CPC/CPA. This is a guideline, but it is not the best way to bid.

Our advice: Place the bid!

These are some suggestions:

  • Take it slow.
  • Increase the price if you receive very few impressions.
  • Google is not delivering the clicks you want, and your goal seems to be being compromised. Lower your CPC.

Some people advocate bidding more than the average CPC amount. These people believe your ad should rise to the top eight search results, then reevaluate.

A word of caution. Google will happily take your money even if you overpay.

Maximize Profit By Bidding    

When we talk about getting the most out of advertising spend, many people think of ways you can lower the average cost per click. As long as you get a return (i.e. They convert to revenue-generating actions ).

How do we adapt our bidding strategy to make money for your business?

1 Calculate the return on investment (ROI).

Before you can create a bid strategy that maximizes profits, you need to first calculate how much you will make each click and every bid.

This is a step by step method to calculate ROI.

  • Look at Google Ads to find out how much you pay per click over time. 
  • Calculate conversion’s value. It can either be the average amount you make from a purchase or the average amount you get from customers.
  • (Campaign Revenue) / (Campaign Revenue + Campaign Costs) = estimated ROI

Once your ROI is estimated, you can start to improve it. 

  1. Maximizing revenue. This can be achieved by targeting keywords and bidding aggressively for customers who have strong buying intentions. (which increases conversion rate).

  2. You have two options to reduce your expenses: improve your quality score (which lowers Ad rank and raises CPC) or choose less competitive keywords (it will not only decrease CPC but also volume, intent and intent).

2 Increased Cost of conversions

I was stunned by this idea after watching an innocuous video made by one of Google’s chief economists. 

He basically describes the bizarre idea of lower profits due to additional conversions. 

Extra effort can mean more clicks.

Profit comparison between two bid amounts.

Hal Varian illustrates in this diagram the point at which the cost of extra clicks with higher bidding is greater than the value (additional income), of new conversions.

The only way to get $70 more is to raise a $4.00 bid up to $5.00. Although this doesn’t mean you’ll lose as much money, it will reduce your profit margin.

These are the steps to increase profits by using one keyword.

  1. Maximize your CPA’s profitability
  2. Calculate the conversion rate
  3. Calculate value per click
  4. Increase your bids so that the value per click = an incremental cost per click

This is impossible. It is not practical. It is possible to make a profit, but it is not guaranteed.

3) Be a bit cautious when bidding on an Ad Position

Your ad position determines the order in which Google places you advertisement relative to other ads. These factors include relevance, bid amount, and price.

Searchers instinctively want to be at the top of search results. It is more costly than the benefits it provides.

I tried to balance high-quality traffic volume with low bid costs.    

 Click volume won’t help unless it’s a part of your CPA goal. The bid can be reduced until it is low enough that you get high quality traffic volume.

Establish Bid Management Goals

Each bidding strategy is tailored to specific advertising goals. I could use CPC bidding to help me achieve my goals.

The chart below illustrates some possible goals.

This is a sample roadmap that will help you plan your bid management goals.

Google Ads Bidding Strategies

Do not be afraid to change your bidding strategies and goals. You can then make a decision.

Now that you have identified your goals (the goal), you can start to plan your strategy. This chart will help to remember the metric Google Ads strategies aim to increase.

Campaign Focus organizes Google Ads Bidding Strategies

This section will explain Google’s bidding strategies as well as how they work. This section also provides guidance on when and how to use them in your campaigns.

Should I use smart and automated bidding strategies?

You’ll eventually have to decide whether or not you want to use automated bids

What does all this mean?

Automated bidding.

Smart Bidding. This is a subset of automated bidding.

These questions can help you switch to automated bidding.

Conversion volume. Is there enough data to feed the automated bidding system? 

History. Do you manage a large account that includes many keywords and ad groups? 

Time efficiency. How long do you spend managing keyword bids and other PPC tasks? 

Manual plateau. Is my account financially sound? Is it producing poor results?

Do not attempt to manage automated bidding strategies as manual campaigns. Focus on account- or campaign-level goals.

Let’s take a look at the most common Google Ads bidding strategies.

Manual CPC

Bidding Type: Manual

Use to: Get clicks

Manual CPC is a great strategy for new advertisers. Setting campaign-wide bids can actually be better. 

Campaign-level bidding applies exactly the same bid to every keyword in the campaign. Instead, the same bid will be applied to every ad group in your campaign. 

Set up your campaign for a Manual CPC bidding strategy.

Google Ads Manual CPC Bidding

Next, choose your ad group to create new bidding. Click Edit in the top box. Next, click on Change Bids in the dropdown.

Create new bids in bulk

Each keyword in your campaign should use the same Max CPC bidding.

Google Ads are a paid-to play platform. Your bids will be adjusted based on data. 

Take, for instance, a $100 Cost per Acquisition (CPA) bid. Once you have collected data, it’s possible to adjust your bid. 

Bonus Tip: Make sure you have enough money each day for your campaigns. Campaigns with a VGC of $5 will need a daily budget of between $50 and $100.

Maximize clicks

Types of bidding: Automated

Use to: Get clicks

Maximize clicks allows you to bid for clicks. Google will request a daily budget. The system will then manage your bids to obtain as many clicks as possible each day according to the budget. Google is competing. Your costs will equal the budget.    

Target ROAS

Types of Bidding: Smart

It can be used to: Increase the conversion value

Smart bidding strategies include targeting return on ad spend (ROAS). Conversion tracking should be set up correctly. Target ROAS (return on ad spending) is a smart bidding strategy.

Target CPA

Bidding Type: Smart

Increase conversions

Target Cost per Action (CPA) is a way to increase conversions. The bid may affect the value. It is possible for it to go slightly under or over this amount. You can pay for conversions, not clicks.

Maximize Conversions

Bidding Type: Smart

Increase conversions

Maximize the conversions This smart bid strategy focuses on obtaining conversions. You should be prepared to spend quickly.

Maximize conversions will not use any bid adjustments you may have.

Maximize Conversion Value

Types of Bidding: Smart

Increase conversions

Maximize conversion value will maximize your campaign’s total worth. 

Enhanced CPC (ECPC).

Types of Bidding: Technical (manually).

Increase conversions

CPC/CPA hybrid. You can disable this setting if you don’t like it!

Share your impressions

Types of bidding: Automated

Make impressions (visibility)

Target impression sharing is a great way to increase impressions. Target impression sharing is great for increasing impressions.

You cannot bid higher than your Max CPC bid limit. If your maximum bid limit for a keyword is too low, this strategy won’t work.

BONUS: Maximize your CPV

Types of bidding: Automated

It can be used to: Increase engagement (visibility).

Bid management in search results. Clicks on video elements ). In Google Ads, you can determine the maximum price per view.

Rule-Based Bidding

Manual CPC has one major drawback. You need to take into account many variables at the keyword level.

The problem is volume. If you had five keywords, it would be easy to scale. When you take into account all bidding options and factor in keywords and context data, it is hard for one person to scale.

Most tasks can be automated using rules. These bid adjustments can only be made at the keyword-level. Google rules based bidding doesn’t consider other keywords’ bids nor how this affects your campaign budget goal.

How to create rules

I will show you how to set up rules-based bidding if you are interested in it.

Open your Tools & Settings menu. Next, click the plus button to create a new rule.

Google Ads Rules

Now you’ll see a list of rules. Multiple conditions can be specified that could warrant bid adjustments.

For example, you can create rules to raise bids for ad groups that fall below your CPA target.

Example rule to increase max CPC

This rule reviews data from the last 30 days once per week. If the CPA falls below $80, it will raise bids 25% until the maximum CPC hits $15.

This rule and others like it automate manual bid adjustments. You can modify the target CPA or CPM.

Rules-based bidding is not without its merits. Let’s leave it at that. You can make your final decision.

The pros and cons of rule-based bidding

  • Advertisers have the ability to make it highly customizable
  • Automate tedious bidding processes

Cons of rule based bidding

  • To achieve results, you must follow good rules. Your campaign goals must be protected.
  • Bidding can become more complex and the rules may have unexpected consequences.

Portfolio Bidding

Portfolio bidding has been my favorite type of auction. Portfolio bidding offers the best of both worlds: the flexibility and customization of Manual CPC, and the ease and convenience of automated strategies.

Portfolio bidding, or more precisely, “a bid strategy that groups multiple campaigns, ads group, and keywords in order to achieve performance objectives” is portfolio bid. Kobe Digital uses it often for certain accounts.

Portfolios are possible at campaign level. The portfolio algorithm will, contrary to rule-based bidding, consider how portfolio bids interact with each other and how they affect the budget.

How do I create portfolios

Do you want to bid on portfolios? Then open your Tools & Settings menu. Next, click the plus button to create a new portfolio.

Navigate to Portfolio Bid Strategies page

To see all strategy options, click the plus button. Maximize clicks. Maximize conversions. Maximize value Maximize impression share

Portfolio bidding strategies

The system allows you to set a minimum bid, like $5, if you don’t want to spend less that $10. 

Sample portfolio bid strategy

You are free to create your portfolio. We recommend you do a test.

The pros and cons of portfolio bidding

  • Advertisers have the ability to make it highly customizable
  • Layer manual bidding with smart strategies for more control (see the example above).
  • Combine multiple campaigns to reduce time spent learning.
  • It’s already in your shared library. It is only necessary to create it once.

Portfolio bidding

  • Advertisers tend not to use this resource enough.
  • Combining unrelated campaigns can cause confusion
  • Too low bid caps can decrease the effectiveness of automated bidding strategies and reduce overall impression share.

Common Bid Management Mistakes

I forgot to set a limit for my bids

They say “To err is human”. Let me share some common blunders people make when managing bids so you don’t make them.

#1: The wrong bidding strategies

Are you looking to increase conversion volume? This bidding strategy may not be the best if you have another goal. 

Knowing your goals is essential to determine if your bidding strategy is on track.

#2 Budget insufficient to pay for the bids

You should reflect your max CPC bids in your daily budget. Two clicks will limit your budget. 

Don’t let your budget restrict the number of clicks you can get

 A daily budget should allow you to make 10-20 clicks. 

You should not be shortchanging your bid. It can have a negative impact on your budget.

#3 Don’t set bid caps

This one might seem easy, but if you’ve been doing manual bidding for a while, it can sneak up on you.

Avoiding a bid limit in your bidding strategy is like eating out of a hotel minibar. Portfolio bidding can help you avoid this.

Pay attention to your bid limits. A bid limit of $4.00 will prevent automated bidding strategies from pursuing opportunities below that amount.

#4 Don’t use smart bidding too soon

Smart bidding strategies use historical data to maximize performance.

Before switching to automated bidding, ensure that you check the following indicators in your manual campaigns. 1. Conversions High traffic High traffic 3.

#5 Too much patience

You will have a negative impact on your performance if you make changes to your bid strategy soon. 

Your account is still learning. It is hard to wait but the rewards are well-worth it.

 It is harder to collect data from granular accounts.

Account granularity is a positive thing. It improves the relevancy of keywords and ads.

  1. Use to increase your lookback window and aggregate data 

  2. Moving up in the ads hierarchy. Combining information from higher account levels (ads – ad set – campaigns- accounts)

  3. You might consider combining small, similar campaigns into a single portfolio strategy

#6 No Accounting for Other Conversion Factors

Scientifically, this error is called a “confounding factor”. This is when we make assumptions about bidding but don’t take into account all conversion factors.

PPC costs are affected by many factors, if you didn’t notice. Bidding strategies are also used to manage them.

It is easy to forget some very important points:

  1. Inefficient landing webpages.

  2. Quality score can have an impact on your bid costs. You should ensure that you maximize your quality score. 

  3. How you define conversions can affect the appearance of keyword performance. One click to fill-in for one client equals two conversions. A high conversion rate doesn’t necessarily indicate success in revenue.

  4. Keywords that indicate intent to buy.

  5. Different conversion time. Verticals have different conversion speeds. You need to adjust your lookback windows in order to account for differences in sales cycles and give enough time for conversion data.

  6. Seasonality. It is impossible to compare the August-length lookback period that includes Black Friday sales with an August-length time frame. 

PPC Bid Management Tool: Thoughts

Bid management tools automate PPC bidding administration, if they don’t exist. Google is using the same pitch when it comes to automated bidding.

Many platforms claim to offer bid management tools. These are the most common.

  1. Kenshoo
  2. Marin
  3. SearchAds360 (rebranded Doubleclick).
  4. Optmyzr
  5. Acquisio

Google Ads should be switched to an external bid management platform. It all comes down to how you feel about Google Advertising.

Google Ads are viewable from two perspectives:

1. Google, a greedy dictator, gives away its black-box advertising data to make money from advertisers.

2 Google has the most powerful computing power and is the best source for bidding and intent.

It is possible that it is a bit exaggerated. Your feelings on the question will determine if your system is built in-house or purchased bidding software.

Find out which PPC bid management software uses to offer suggestions or adjustments. It’s almost impossible to make data-based decisions.

Warning! PPC bid management software does not make bidding management easy. We don’t think they work.

Conclusion

The navigation of bidding strategies and bid management was one of the most complicated aspects of PCC. This brief overview of PPC bid administration will help you to understand the basics of the process.

We support a manual-only PPC bid management approach. They should not be allowed to give up bidding control.

We want to modify this advice slightly. Automated bidding is possible in certain circumstances and can be very useful for campaigns.

Automated bidding can allow you to focus on more important tasks such as

  • New account structure
  • Writing better ad copy
  • Optimizing your landing page
  • Creating Retargeting campaigns 

What is the last message? Let data guide you, manual and automatic.

Keep an eye on your finances and watch out for trends. Have fun and do experiments often.

About the author

Kobe Digital is a unified team of performance marketing, design, and video production experts. Our mastery of these disciplines is what makes us effective. Our ability to integrate them seamlessly is what makes us unique.