In Google Adwords one the most fundamental and important aspects of running a Google Adwords campaigns is how you go about managing your Ad Group and keyword bids. As someone who oversees the bid management process for various client accounts I thought I might share a few basic tips about how to effectively approach the managing your bids.
Bid management can be a difficult concept to grasp if you are new to Google Adwords and PPC (Pay Per Click) in general. It is a process that requires rigours and continuous monitoring and adjusting over a period of time.
Simply put, a bid is the maximum amount your willing to pay for a click on your ad. Bids are also called maximum CPC (COST PER CLICK) or Max CPC. This sounds like an easy concept to put into practice but managing this in reality can be quite tricky especially when you’re looking to achieve the best ROI you can for your Euros.
Bid Basics 1: Max CPC & Quality Score
A lot of people get confused with the Max CPC value in Google Adwords and what it entails exactly. When you set a Max CPC value you are specifying to Google the highest amount you are willing to pay for a click. In reality however the actual amount you pay is pretty much always less than the amount you bid. With Google Adwords the actual cost per click you pay is based on your quality score rating which is based on your Max CPC, your click through rate, ad copy & landing page relevance as well as other factors.
For example if you pay €1 for a click you could in theory only pay as little as 20 cent. But this very much depends on the market you are bidding in for your keywords and your quality score rating. Another thing to remember is that you can expect to pay expensive sums of money in some PPC markets even if you have a 10 out of 10 quality score rating. Industries such as finance, legal and automotive sectors naturally bare the cost of expensive clicks on some related industry keywords and phrase. This shouldn’t put you off your stride however as the reward for converting some of theses clicks can be so high.
Bid Basics 2: Google Adwords is not a Pure Auction
A lot of new comers to Google Adwords fall into the trap of believing that PPC is a straight forward auction whereby the top spot for an ad is automatically given to whoever bids the highest price. But this couldn’t be further from the truth. The beauty of PPC platforms such as Google Adwords is that it allows you to compete on an even keel with even the largest advertiser out there no matter how big the competitions financial pockets are. Advertisers with excellent quality scores can and do appear above other advertisers who have set higher bids.
In other traditional forms of advertising such as TV, Radio and news paper advertising, the most dominant advertisers are nearly always the ones with the largest budgets. But through PPC platforms such as Google Adwords it is possible for a business operating on a small budget to out rank larger advertisers by simply adhering to some best practices when it comes to targeting keywords, matching landing page relevance, creating decent ad copy and being smart about managing their bids.
Bid Basics 3: Getting off to a good Start
A lot of people who start out using Google Adwords for the first time tend to do so using a very cautious approach in terms of the amounts that they bid on for their keywords. Their natural reaction is to bid very low so that they can reduce the risk of loosing money.
It is important to start out on the strong foot when using Google adwords. This is a point that I always emphasise to my clients. Although PPC isn’t a pure auction, your max CPC is part of the bidding algorithm that determines your ad rank (position on the page). If you bid low when first starting out the chances of your ad ranking in the top positions on the first page are minimal.
Also advertisers that are starting out with new campaigns are automatically at a disadvantage because their account has not established a quality score yet. Over the course of time accounts that perform well will be assigned higher quality scores. This makes it easier when introducing new keywords in an account later down the line if the historical performance of the account is good.
However brand new accounts have no historical track records to rely on. So in the beginning of your accounts life cycle Google will assign quality scores on the basis of the performance of other advertisers bids on the same keywords. That is why it is so important to initially set your bids high in order to get a series of clicks under your belt and get your account up and running as soon as possible. The better your account performs over time the better your quality scores will become. You can reduce your bids over time and maintain the same ad rank position once you have firmly established good quality scores.
Conclusion
Whether you are a seasoned Google advertising qualified professional or just starting out on Google Adwords for the first time you will come very accustom to managing bids and developing specific bid strategies. PPC bid management is a critically important component of the PPC management process. By following some of these basic tips you should be able to improve on your ROI by managing your online advertising spend more efficiently.
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