Source : (practicalecommerce.com): In a pay-per-click world where your Quality Score seems to be controlling the performance of your campaigns, there is one proven method to improve performance. It’s called ongoing bid management.
Regardless of whether you’re using enterprise level bid management tools, such as Marin Search Marketer, mid-tier tools, such as ClickEquations, low budget tools, such as Adapt or whether you manage bids through crazy Excel macros – below is a list of logical strategies you may want to consider exploring.
Understand The Lingo
Specialized terms that I’ve used in this article are explained below.
Cost per acquisition (CPA). This is the overall pay-per-click cost of a keyword or phrase divided by the number of individual sales transaction generated by that keyword or phrase.
Average position. This is the ranking of your ad on the search engine results page.
Impressions. The number of times your pay-per-click ad appears on a search results page.
Points to Remember
Date ranges for reports should vary depending on the volume and activity of your campaign. Other factors such as account structure and landing pages will significantly impact the performance outside of bid recommendations. Do not use these recommendations on content or network campaigns. This is for search campaigns, only.
There are other conversion events (in addition to actual sales) that should be considered before making bidding decisions. These include phone calls received, contact us forms completed, catalog sign ups, branding and so forth.
Generate the Proper Data
Generate a keyword (not a Ad Group or campaign) report for the last 60 or so days for each search engine you advertise with.
Using Excel filters, arrange keywords into these nine buckets:
a. 2X acceptable CPA or higher
b. 1.5X acceptable CPA or higher
c. Acceptable CPA range
d. 50%-80% of acceptable CPA cost
e. Dirt cheap CPA
f. 1.75X acceptable CPA or higher – no conversions
g. 2.5X acceptable CPA or higher – no conversions
h. No clicks but one or more impression(s)
i. No impressions
Get ready to do some detailed PPC work
Bid Management Steps
Kill the waste:
a. “2.5X acceptable CPA or higher – no conversions” – downgrade the bid by 80% or pause the keyword.
b. “1.75X acceptable CPA or higher – no conversions” – downgrade the bid by 50%.
a. “2X acceptable CPA or higher” – downgrade the bid by 30%.
b. “1.5X acceptable CPA or higher” – downgrade the bid by 15%.
Important note: Consider conversion volume generated by these keywords before adjusting bids. If your top volume keywords have above acceptable level CPAs – leave bids as is or consider a smaller bid cut.
Enjoy the spoils:
a. “Acceptable CPA range” – do nothing
Important note: Consider conversion volume generated by these keywords. It may make sense to increase bids on high volume keywords.
Compensate for decrease in conversions:
a. “50%-80% of acceptable CPA cost” – increase the bid by 20%.
b. “Dirt cheap CPA” – increase the bid by 40%-50%.
Get some additional exposure:
a. “No clicks but one or more impression” – increase the bid by 50%.
Important note: You’re likely to see very high average positions within this bucket of keywords. Increase bid on these keywords to capture smaller volume long-tail keywords and higher volume core-terms that you may not bidding enough on.
For further review:
a. “No impressions” – mark these keywords for further review down the road; it may make sense to get rid of these useless keywords to cut down on the waste (and in some instances) save your account-wide Quality Score.
Bid management is really an ongoing process. Use the tactics above via either an automated bid tool or manual adjustment as frequently as you see fit. Make sure the date ranges and percent increases/decreases are reasonable and there is enough volume in a campaign to make the data meaningful.