Adwords Explained - Page 6 - Bidding strategy and tips

More Bidding tips and tricks

While the above comments about not relying on simplistic rules should be kept in mind, it is certainly true that the less you bid, the lower your advertisement will appear in the list of paid ads. As demonstrated in Table 1 above, this is significantly affected by the CTR which is multiplied by the bid offered.

Therefore if you are achieving a high CTR, you can consider lowering you bid to achieve a higher volume of clicks for your daily budget (this assumes an abundance of impressions and potential clicks).

Decide on your ideal ad position range

We recommend deciding on a notional “range” of ad positions that you want your ads to appear in ie 1 – 3, or 3 – 6, or 6 – 10, and then tune the bids on all your keywords to achieve this positioning. This will make the process of ongoing analysis and tuning easier, and create a structure to this process of analysis. It will also allow you to identify where your best results come from in ad position terms.

Avoid bidding wars

Unless you have an unlimited budget or just a healthy interest in wasting money – avoid paying massive amounts for position #1. You will usually find that as you approach position #1, particularly on popular broad matched keywords that refer to a wide range of commercial offerings (like “website”) that you will end up having to bid a fortune to achieve the number 1 ad position with any consistency.

Being prepared to sacrifice only 1 or 2 ad positions will often greatly reduce the bid required to achieve this. For example, to achieve position #1 for the term ‘CRM’ for Customer Relationship Management software, you need to spend around $6 - $7 (or more!). To achieve position 3 – 6 however, a bid of $2.40 will suffice. Again, finding the sweet spot that matches your advertising goals is key, but overpaying for position #1 and then being disappointed with a very low click volume and ROI (due to the low number of clicks) is a mistake many new Adwords customers make.

Don’t automatically assume that because the click came from position #1 that you are massively more likely to convert this customer to a sale….you need to carefully test these assumptions through use of “conversions” (discussed later).   This point can't be over emphasised:

CONVERSIONS are the goal, and beyond analysing ad position - you must look at the cost / conversion of a keyword.   A poorly converting keyword may be a good candidate to reduce the bid on, or in fact cull altogether if over time, this keyword does not convert well.

Positions 1, 2 and 3 are special

For many search results, Google will display Adwords ads in position 1 and 2 – above the free search results. Positions 1 and 2 are shown in the screenshot below as the top pink bubble.

This is a special situation that obviously gives your ads far more prominence than the usual Advertising position which is on the right hand side of these search results. It certainly gives your ad a greater exposure to the user, so if you have the budget and the appetite for this, aiming to achieve position 1 or 2 regularly will give you great exposure (but it will cost a lot more!).

Because up to 2 ads are shown above the free search results (occasionally up to 3 are displayed), this means that the ad in position 3 takes on the position that would otherwise be position 1 to the right of the free search engine results. This creates a special incentive for those who can afford it to aim for positions 1-3.

Daily budgeting – it’s not exact

You may find that on certain days that your advertising spend exceeds your daily budget. Google take into account the average spend over a month based on your daily budget, so don’t panic if you find you are spending more than you expect on an individual day, as things will average themselves out over time.

Automatic discounting

Google have a system of ensuring you only pay the minimum amount that you need to, in order to secure the ad position that they show your ad in. That sounds pretty confusing – yes? Well it is a little, but the good news is that it works in your favour.

To illustrate, lets say that 3 ads are being displayed in position 3,4 and 5 which all have the same CTR of 1%. If position 5 has bid $1.50, position 4 has bid $2.00, and you have bid $2.50 and therefore are being displayed in position 3….if a user clicks on your ad – then you will only be charged $0.01 higher than the lower position as this is the minimum amount you had to pay to hold your position, so in that case you would be charged $2.01 (just above position 4’s bid).

Therefore don’t be surprised as you analyse your results to find that in fact you are often paying less than the maximum bid that you offered on that keyword term. This means that you can bid more aggressively with the knowledge that you will only pay the minimum required to hold the position your ad has been shown at.

Strategies for increasing ad impressions

If you are finding that each day you are not achieving the volume of ad impressions that you desire, then there are ways to increase the number of times your ads are shown.

In general, broad match keyword terms will as the name implies, match a broader set of user search query terms. This will immediately increase the number of times your advertisements are displayed.

So in the examples above, adding in a simple broad match keyword like ‘vacuum’ will greatly increase the number of times your advertisement is displayed, giving you more potential users to target your advertisement to.

This comes with the downside of matching terms such as ‘vacuum cleaner repair’ which may not be aligned with the service you offer or even worse ‘exhaust manifold vacuum’ which an auto mechanic may be searching on!  A good strategy for crafting a balance between going too broad and too narrow is the use of two-keyword broad matches. This allows you to use the generic word ‘vacuum’ and then use a range of 2nd keywords in the broad match term in order to ensure you have a user who is interested in vacuum cleaners. For example, you might enter:

vacuum cleaner
vacuum carpet
vacuum hoover
vacuum dyson
vacuum shagpile

This increase in positive keyword matches, is an alternative to the negative keyword option described earlier in this paper which simply prevents display of ads when non-relevant keywords (such as ‘manifold’) are used in the search terms. Using brand names as above can be an effective way to ensure that you are finding users who are searching for popular vacuum cleaner brands. You need to be a little careful in using competitor names, particularly where these are trademarked terms. Google may disable certain keywords or advertisements if they use these trademarked terms or if they receive complaints from these firms, however I recommend commencing by including these as they can offer deliver strong results.

Using a broad matching strategy increase the volume of keywords, while the 2nd keyword ensures some level of focus. Adding a 3rd keyword can help narrow down even further. There are practical limits to how narrow you want to target a broad match term, so a 6 keyword broad match term is probably not going to achieve many matches!

Where to find good keywords

Beyond the obvious strategies for broadening or narrowing your keyword matching approach, the question arises what the best places are to identify the keywords you should use in your campaign.

Google itself offers a “keyword tool” (above):

Entering in the website address of your own existing website or a competitor’s website, will then prompt Google’s keyword tool to automatically analyse these sites and offer a range of keyword suggestions.

I recommend also visiting your competitor’s websites with notepad in hand and record a range of words that you observe they are using. Viewing the HTML source of their website (accessible in your browser) will also allow you to view the keywords they are using as “meta tags” – these are usually at the top of the HTML document within the tags.

It is also worth searching on the key terms such as ‘vacuum cleaner’ on Google and other PPC sites (yahoo.com, msn.com) and observing the keywords that others are using in their PPC advertisements.

Watching television or listening our for radio advertisements of those selling similar products may also be a useful source of keyword inventory, as will purchasing industry magazines or trade show information. These all show how people are referring to their products and services. Don’t fall into the trap of thinking you already know the answer to all these questions, as just a few minutes of research will often reveal novel ways that others are advertising and provide useful suggestions for broadening your keyword inventory.

Aside from review of external sources, consider also variations on the keyword terms that you’ve identified such as common misspellings of these words, plural or other forms of the words (ie hyphenated words, different endings such), synonyms for these words, and thesaurus tools are also a useful source of additional keywords. Broad matching will cover some of these, however you may wish to test each minor variation individually as sometimes minor variation in word forms can result in a significantly different CTR.

Page 7....Targetting needs, and culling the non-performers