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As search engine marketers it is our job to always be on top of changes in the market and changes in the various search engines. With the increasing number of features at hand for the search engine marketer it also becomes more attractive to use tools and software to automate the easier and more repetitive tasks. By automating these tasks we can save significant amounts of time. This time can then be spent on the more challenging and creative tasks. In this post we’ll have a look at the various ways to perform bid management, from manual to fully automated. We’ll go over the pros and cons of each method.

I’ll start by quoting Craig Danuloff: “Great bids can’t fix a lousy campaign”. Let’s assume your campaigns are well structured and optimized. There are many ways to make sure you don’t have to spend hours on your PPC bid management, I’ve narrowed them down to the following categories:

  • Manual bid management (either in the interface or in AdWords Editor)
  • Bid management by using Excel
  • Bidding with automated rules
  • Bid management with AdWords scripts
  • Bid management with Google Conversion Optimizer
  • Bid management with 3rd party platforms

Manual bid management

The most basic form of bid management would be going the manual route and is probably where every PPC professional once started: changing bids in the AdWords interface or by using AdWords editor. The new bulk edit features are an improvement here, but still it means you have to go through your keyword list manually. This is not a complete downside, as your top keywords deserve this amount of attention. For your other keywords, which can amount up to several thousands to millions depending on your account, you aren’t able to spend that much time and if you are you probably can spend it better by performing other tasks.

Pros

  • Attention for your keywords is high. This leads to a good insight in the performance of your account and how the most important keywords are developing.
  • It’s also easier to include the value of assists when assessing each (individual) keyword.

Cons

  • Impossible to manually perform this task over the bigger accounts (although the bulk edits are an improvement).
  • Time consuming

Bid management by using Excel

The easiest and most accessible way of managing your PPC bids would be by using AdWords Editor, Excel and either your CPA or ROAS target. If you (or your client) haven’t defined these yet I’d like to refer you to this article to learn how to calculate them.

By copying your keyword view from the AdWords Editor to Excel you are able to add a calculation for each keyword which results in a new CPC bid for each keyword. With the good compatibility between AdWords Editor and Excel it is then really easy to copy the keywords with their new bids back to the Editor and upload the changes to AdWords.

CPA target and historical data
For each keyword that has had a conversion we use the historical conversion rate and the desired CPA to calculate the maximum CPC we are willing to pay. To do so just add the simple following calculation to an extra column:

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Example: Goal CPA $ 50, historical conversion rate 0,5%. Your new maximum CPC bid would be 50×0,5% = $ 0,25.

Wijnand Meijer has written a thorough post with more detailed steps in this article.

ROAS target and historical data

This one is similar to the CPA version, but now we’re using a ROAS target instead of CPA. Follow the same steps, but now use this formula to calculate the new maximum bid you are willing to pay:

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Example: Desired ROAS 2000%, average value per click $1,5. Your new maximum CPC bid would be $ 0,08.

Your total conversion value divided by the total clicks leads you to your average value per click. In both calculations you can use the conversion rate from converting keywords to guestimate the conversion rate for keywords that did not yet convert. This could be a fraction of your converting keywords or you can go the fancier route by using probability models (Bayes’ theorem for example).

Pros

  • Able to change bids for large amounts of keywords

Cons(iderations)

  • Manual check on outliers is necessary (example; a 100% conversion rate would result in a bid equal to your CPA target)
  • Maximum CPC is not your average CPC. In the calculations above we are calculating the maximum we are willing to pay, which actually is corresponding to the average CPC. By increasing the outcome of the calculation with 10-20% you’re bidding more than you are actually willing to pay, which should turn out just fine in most cases.

Managing bids with automated rules

Automated rules in AdWords have been around for some time now and definitely have their uses, but they are limited in possibilities. Some scenario’s where I’ve found automated rules to be useful in managing bids:

  • Ensure top positions for mission critical keywords (or at least for keywords a HiPPO thinks are important; Ego bidding). Keep in mind that in general you should bid for profit, not for position.
  • Bid up/down based on average position, can be useful if there is a budget restraint or if a season is starting to ramp up
  • Pause non-converting keywords. If a keyword has reached a certain threshold (which can be clicks or cost) it becomes unlikely for that keyword to become profitable. You can then have the rule pause this keyword, or have these keywords mailed to you for manual review.

I’ve left out all the scenario’s where automated rules can save you time (or save your weekend) that are not related to bidding. With these kinds of rules it’s important to always keep notice of the rules that are active in an account. The combination of several rules is golden here: if there is a rule that is bidding up for good performers then there should also be a rule that bids down bad performers to ensure a good balance.

Pros

  • Automated, so it can run at times when you aren’t able to login
  • Change bids for a large amount of keywords

Cons

  • No manual review (although you are able to check the results of automated rules)
  • Calculations aren’t possible in the rules, so you may have to define several rules to cover your entire account

Using AdWords scripts to manage your account’s bids

With the roll out of AdWords Scripts in 2012 the possibilities of automating all sorts of things became easier for the tech savvy PPC account manager. The coding examples available in the AdWords help center such as this powerful bidding spreadsheet which basically is all of your account automated rules in óne spreadsheet!

With AdWords scripts it is also relatively easy to code a script that would take over the bids for all keywords that are in campaigns that contain label ‘bid script #1’. This means we now can use the rules and models we have talked about in the Excel section and automate this in an AdWords script that will run automatically every day, week or month. We can configure the script to send updates on the altered bids, so you can review them at the start of your working day to check for bids that are too extreme.

Pros

  • More advanced possibilities than automated rules offer
  • Can easily cover an entire account within one script
  • Possibility to have a report emailed with a summary

Cons

  • No manual review (although you are able to check the results of the scripts and undo this, manually)
  • AdWords scripts, so a basic knowledge of scripting is required to set the target, more advanced scripting skill are required for a complete AdWords script

Using AdWords flexible bid strategies or Conversion Optimizer

If your campaign has at least 15 conversions in the last 30 days you are able to use the Google Conversion Optimizer. 15 conversions in 30 days are not that much, so in general we would try the Conversion Optimizer when there are more than 100 conversions in the last 30 days. This also depends on the number of keywords: if the number of keywords in a campaign is low Google would be able to manage this better then when the conversions are spread over a larger amount of keywords. The Conversion Optimizer takes into account several factors that aren’t (easily) available to us as users. Examples of this are match types, the actual queries for broad matches, search partner sites, location of users, operation system, browser, language settings and more. When your conversion volume is big enough enabling the Conversion Optimizer can result in an increased performance.

With the launch of the Bidding Strategies Google broadens the possibilities within the AdWords platform. In short the routes-to-go are:

  • Maximize clicks
  • Target page location
  • Target CPA
  • Enhanced cost per click (ECPC)
  • Target ROAS

Cool thing about the Bidding Strategies is that they can also be applied on adgroup or keyword level, which allows you to select different strategies for different kinds of keywords. In case of a retail you could for example set a top-of-page strategy for your branded keywords, a maximize clicks strategy for branding keywords and a target ROAS strategy for your product campaigns.

Pros

  • · More levers to pull
  • · Flexible: selecting multiple bid strategies for keywords in a single campaign is possible (although if a different strategy is required you probably want to have a different campaign, for reporting purposes)

Cons

  • No control except for setting a target
  • Not really transparent
  • Requires a good conversion history on campaign level to work

Using 3rd party bid management platforms

There are a number of 3rd party bid management platforms available. According to Forrester (Nov. 2012) the leading platforms are Kenshoo, IgnitionOne, Marin and Adobe AdLens. I won’t go into the details that distinguish the various platforms here. In general all of them have their own algorithm in place that will take into account many variables and use multiple statistical models to predict the best bid for each individual keyword. For example it might work with a conversion attribution model or take your own backend data into account as well as predicted seasonality based on your input or last year’s results.

There are smart guys behind these platforms, all trying to develop the best bid management platform or even campaign management platform, as most of these platforms allow for a variety of things to be managed from within the interface. This means the platforms are showing good business cases where they really improved efficiency for their users, but of course the platforms come with a price. It depends on your desires and budgets whether one of these platforms would be an interesting choice. If you are managing a bigger budget it will certainly be interesting to talk to them to find out what they might be able to offer you (or your client).

As many others responsible for PPC accounts used to think ‘I can do it better than the machine’, but the platforms are now taking so many variables into account that I would take me too much time to consider my manual bids if I really wanted to compete with these platforms! I’ve had good experiences with several of these platforms.

Pros

  • More advanced settings than the AdWords conversion optimizer can provide
  • Take into account factors outside AdWords to manage the bids

Cons

  • Money, which in general means it’s only interesting for larger accounts
  • Most bid management (or campaign management) tools require tasks to be done though the tool’s interface, which may result in some delay from ‘copy write to go live’

Noticing conversion drops before they kill your account

I’ve seen a scenario where bids would be set by automated rules. One time the AdWords conversion tracker disappeared from the client’s website due to an error. The bids in the account where decreased every time the rule ran which resulted in a significant volume drop over the weekend. Luckily there are also automated rules or Google Analytics intelligence alerts that can warn you for this! The new automated rules that allow you to ‘send email when..’ a certain scenario is happening can really save your account, as you will be able to respond to a drop in conversions the minute the automated rule notices this. Ideally you’ll have one of these rules in place and scheduled to run before your other bid management actions will start, so you are able to intervene.

For all of the methods above manual review of the adjustments would be necessary, as these are really simple formulas and models which won’t be able to predict seasonality.

  • Downward spiral, where seasonality might go up
  • To check match type bids
  • To prevent a passive attitude
  • Even the best platforms aren’t able to predict the future

More on in depth details on why at least some form of human review is necessary can be found in this article from Andrew Lolk.

Summary and remarks

I strongly believe bid management will take a growing role in the PPC world. The various platforms still have room to evolve, if it isn’t for their algorithms it would be for the feature set and support of the various AdWords extensions and features. On the other side bid management for the PPC individual without a big budget is also possible with the use of either the omnipresent Excel or can be even further automated with AdWords scripts.

I challenge you to check if your current bid management and/or bid rules are up to par with the possibilities in the market, as you’ll be able to win so much time if you don’t have to think about each individual bid. This time would be much better spent on writing good creative ad text, specifying an (ad) test schedule, coming up with new features and ideas to test and to set up and follow a good strategic PPC plan.

This is a guest post by Lauryan Feijen, Online Advertising Strategist at iProspect|Netsociety,an online media agency based in Amsterdam. He has been managing PPC accounts since 2009 and is now responsible for the knowledge sharing, quality and efficiency of the online advertising department.

Opinions expressed in the article are those of the guest author and not necessarily Certified Knowledge. If you would like to write for Certified Knowledge, please let us know.

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