Understanding AdWords Auctions

Much like your local car auction house, AdWords keyword bidding is a form of auction.

PPC management companies have hundreds of options when it comes to AdWords bidding – all automatically applied to their accounts. So to get the most out of AdWords, it’s crucial you know what to take advantage of.

AdWords auctions take place extremely quickly and very frequently, taking three major factors into account to decide how your ad should rank:

1. Your max CPC (cost-per-click) for the keyword.
2. Your quality score for the keyword.
3. The ad extensions and their relevance to the ad and keyword.

What Do You Want To Achieve?

You want to make more profit, not spend more on keywords.

When it comes to bidding and average cost per conversions, you’ll always want to keep conversion volume and cost per conversion balances in mind.

You can reduce your bids to save money, but that will hurt your conversion volume.

You can increase your bids which may help improve your conversion volume, but that will increase your cost per conversion.

The good news is that you can have the best of both worlds!

AdWords Bidding Strategies

Some of these strategies use automation, others do not – either way you should never be working on auto pilot.

Always keep tabs on fluctuations, improve your landing page(s) through constant testing and understand that your bidding goals can quickly improve and change (with higher conversion rates, you can afford to be more aggressive with your bids).

Basic Manual Cost Per Click (CPC)

This is the best bidding strategy for brand new advertisers who want to make sure that there’s zero overspending and maintain tight control.

With manual CPC, you can set bids at ad group or keyword level.

Ad group level keyword bidding gives the same bid to all keyword in the group, whereas keyword level gives you the best control.
It is worth noting that keyword bids override ad group level bids.

Automatic CPC

This type of bidding system gives Google the control to raise or lower your bids (up to your daily budget) as it sees fit to get you the most clicks.

This strategy is great if you don’t want to lose impression share too fast whilst reducing your budget.

However, you don’t get to set max CPC bids for individual keywords, meaning you lose out on some control.

Another important point is that you really don’t care about clicks, you care about conversions – so test this strategy but be aware it may not work.

Enhanced CPC

This strategy gives Google the ability to increase or decrease your bids by 30%.

In the event that a conversion is likely to happen (decided by Google’s algorithms that predict when a user is going to convert or not), Google will increase the max bid by up to 30% and vice versa if a conversion looks like it won’t happen.

But beware, take what Google says with a grain of salt! Note this is often the default setting when creating new campaigns, so be aware you’ll need to change the default settings if you don’t want to use it.

Try it on a smaller campaign and compare its performance in conversion rate, conversion volume and cost per conversion to make certain it’s doing what Google claims.

Bidding Scripts – The Future Of AdWords

AdWords scripts allow you to automate your AdWords activity on a time interval and a variety of different metrics that you set.

Using scripts allows for the best customisation in AdWords, it also lets you get super creative with your AdWords rules – like changing the bids depending on the position you want the advert to show or even syncing bids up to national holidays!

Bidding on Branded Keywords

Bidding on branded keywords can lead to an increase to your overall account health and performance improvements for the other keywords on your account. People who type your brand in are also directed to a dedicated landing page, usually this means these people are more aware of your business and what it offers, thus have higher potential to convert.

Even if your SEO is getting you organic clicks for ‘free’ it’s worth considering paid search branded keywords.

What’s The Next Step?

There’s so much more to AdWords management, with that said you need to ensure you’re testing  and improving at every opportunity.

Still feel in the dark about AdWords or these terms not making sense?

Get your free strategy session now and we’ll do the hard work for you.