Search Engine Marketing

Better Bidding on Google Ads

Choosing the bid rule that maximizes your KPI

With so many features and settings available in Google Ads, you may be tempted to just fiddle with stuff. Don’t! The efficient PPC minimalist will never do anything in an account without a clear reason.

Our job as specialists is to improve the quality of our ads and the relevancy of our audience and then set the right bids. There are many situations where an algorithm is a poor substitute for the instincts of an experienced professional, but bidding on Google Ads is not one of them. That is one job that should be automated.

Google, Facebook, and Bing all offer automatic bid rules, so there is no reason to use the bid rules in marketing software like Hubspot or Kenshoo, which must rely on their auction data secondhand. While third-party platforms may promise cross-channel optimization, it is better to optimize the bids for each channel independently using the correct bid rule.

An automated rule will adjust your bids to maximize a specified metric, but it will not tell you which metric to specify. It is up to us to choose the key performance indicator (KPI) to target with a bid rule.

The most important KPI you can measure

If you don’t know the revenue generated from a sale, then you cannot use a bid rule that targets return on ad spend. If you have not set up conversion tracking, then you cannot use a rule that targets conversions. If you do not know the customer lifetime value (LTV), or the close rate of the sales team, or marginal cost of the product or service provided, then you cannot optimize bids to maximize profits. Etc.

This is why it is so important to get the best information you can before starting a campaign. If the only thing you know is the client’s budget and you are not tracking conversions, then the most important KPI you can measure is web traffic and engagement. In that case you should use the Maximize Clicks rule in Google Ads, or its equivalent in another platform.

If on the other hand you have set up and validated conversion tracking in the platform, then you should use a rule maximizing conversions instead of clicks. Conversions are a more important KPI than clicks.

A bid rule that maximizes X given a defined budget must necessarily achieve the lowest possible price for X that spends the budget. That phrase “that spends the budget” is critical, since the absolute lowest possible price is $0, which will yield 0 clicks. You don’t want the lowest price; you want the lowest price that spends the budget. If you are successful, you will keep adding budget, and that price will increase.

Without a clear reason to favor one click or conversion over another, you should avoid bid adjustments or “enhanced” bidding that would deviate from your maximization strategy. But if you do have good information on the LTV of a customer, you can potentially target a more important KPI than clicks or conversions.

By Kevin Frei

Kevin Frei is an entrepreneur, paid media specialist, and intermittent nomad from Arizona. Ethical Digital is his third startup after and an online traffic school company. An avid traveler and economics hobbyist, Kevin's goal is to revolutionize the way service companies are organized so that more people can achieve the dream of professional (and locational) independence.

Facebook | Twitter

Leave a Reply

Your email address will not be published. Required fields are marked *