This document provides an overview of bidding strategies and principles for Google AdWords campaigns. It begins with discussing the importance of proper goal setting, tracking, and attribution modeling as prerequisites for effective bidding. It then outlines several bidding principles, such as using value per click to guide max CPC bids and calculating bid adjustments based on segment performance compared to campaign averages. The document introduces a bidding framework that matches bid strategies to monthly conversions, with the goal of increasing quality score and ad rank through both manual optimization efforts and automated data-driven bidding. It concludes by listing several free bidding tools, scripts, and third-party platforms.

1. The Definitive Framework
for Bidding in AdWords
Wijnand Meijer
Sr. PPC Strategist | iProspect | @ wijnandmeijer

2. Agenda
• About me
• Disclaimer: “Great bids can’t fix a lousy campaign”
• Prerequisites for bidding:
• Sophisticated Goal Setting
• Proper Tracking
• Multi-touch Attribution
• Growing complexity & limited time
• Bidding principles
• The AdWords bidding framework
• Appendix: free rules, scripts & 3rd party tools

3. About Me
• Sr. PPC Strategist at iProspect Amsterdam
• Started with PPC in 2006 for SMB accounts
• Joined iProspect in 2009 to work on larger accounts as Sr. Consultant
• Taking my time to write the Complete AdWords Audit Series
(15 down, 4 to go, started 3 years ago)
• Specialized in PPC audits for the last 4 years
• Voted in top 25 most influential PPC Experts in 2015 & 2016

4. Disclaimer
“Great Bids Can’t Fix a Lousy Campaign” - Craig Danuloff,
2010
From his great eBook 21 Secret Truths of High Resolution PPC:
Don’t worry too much about the bid for any keyword until it:
• Lives in a tightly organized ad group
• Uses the right match type
• Attracts appropriate search queries
• Is paired with targeted and persuasive text ad copy
• Sends traffic to an effective landing page or conversion path
Any bids calculated and set before these milestones are achieved are based on
inconsistent inputs, so they really can’t be accurate or optimal.
Spend a lot of time on bidding… after you’ve spent a lot of time on
everything else.

5. Prerequisites for bidding

6. Goal Setting
Are you as sophisticated as you can be?
Digital 1.0:
Fixed
Budgets
Digital 2.0:
Fixed CPA
or ROAS
Digital 3.0:
Max
Profits
Google’s Profit Playbook Hangout

7. Goal Setting: Fixed Budget
“Spend € 50.000 / month no matter what”
Required reading for anyone still on a fixed PPC budget:
Overthrow The Tyranny Of Paid Search Budgets:
• If ROI is positive, why constrict spend if you would be making money by spending
more?
• If ROI turns negative, why keep spending?
The decision to treat the ad spend as a cost of revenue instead of part of the media
budget is simply an accounting choice.
Provided you can hit your efficiency metrics routinely over time, this construct allows
paid search managers to focus on one and only one thing: how can we efficiently drive
more revenue to my company through paid search?

8. Goal Setting: Fixed Budget
50 liters please, hope it gets
me where I need to be this
month!

9. Goal Setting: Fixed Budget & Efficiency
What’s even worse than a fixed budget?
“Spend € 50.000 / month AND hit my target CPA of € 50”
Again, required reading of George Michie for people trying to solve this unsolvable situation:
The Paid Search Uncertainty Principle.

10. I demand a car with 50 liters of
petrol in the tank AND I need to drive
exactly 800 km at any speed and
under any circumstances, without
stopping for petrol or having any left
by the end of this month.
Budget
Target Conversions
Market opportunities &
auction dynamics
Goal Setting: Fixed Budget & Efficiency

11. Goal Setting: Fixed Efficiency
“Hit my non-branded CPA target of € 50 no matter what.”
The good: you can focus all your time and energy on reaching this efficiency and let budget
rise and fall with market opportunities.
The bad: your current CPA or ROAS target may not be the one that maximizes your total
profit in real $, €, £…
Pro Tip: use 50% of your margin as a starting point for your target CPA or ROAS calculation:
CPA: (margin in $, €, £… × 50%) × lead to sale conversion rate
ROAS: 1 / (margin in % × 50%)
So you’re probably not asking yourself “Would I rather have 100 conversions
for a CPA of € 50 or 120 conversions for a CPA of € 60?”

12. Goal Setting: Fixed Efficiency
I’m only interested if I can
drive 16 km with each
liter of petrol

13. Goal Setting: Profit-driven
Bid for the combination of volume (conversions or revenue) and efficiency (CPA or
ROAS) that delivers you the most total profit.
Profit-Driven Marketing articles by Google

14. Goal Setting: Profit-driven
Which car would give
me the best value for
money?

15. Proper Tracking
What gets measured gets done
How do you measure conversions, revenue or profit?
More like this?
Or more like this?
Do you include (especially for
mobile):
• Lifetime value?
• Cross-device conversions?
• Phone calls?
• Store visits?
• App downloads?
• Referral value?
Conservative estimates are less
wrong than “0”!

16. Multi-Channel Attribution Modeling: The Good, Bad and Ugly Models
Multi-touch Attribution
Give credit where credit is due
The only use for last click
attribution is to get you
fired. Avoid it.

17. Multi-touch Attribution
Aaron Levy - What’s the best attribution model For PPC?

18. Multi-touch Attribution
What’s ‘the best’ model?
• According to Google it’s data-driven attribution. Worth trying if you’re eligible: 20.000+
clicks and 800+ conversions in 30 days.
• According to Avinash Kaushik, it’s something like this (import available from GA solutions
gallery):
• According to Aaron Levy it’s a reverse iteration of time decay (first preferred), not
available in AdWords or Google Analytics:

19. Prerequisites for bidding
To Summarize
Don’t
Work with a fixed budget
Track the first online sale or lead only
Use last click or first click attribution
Better
Work with a fixed non-branded CPA or
ROAS target and a flexible budget
Include cross-device conversions
Use position-based, linear or time decay
attribution
Best
Be profit-driven, with a flexible CPA or
ROAS that maximizes total profit
Include lifetime value and measure (or
estimate) all relevant conversion channels
Use a data-driven or custom attribution
model

20. Complexity & Limited Time

21. Growing Complexity
More and more contextual signals to bid on
With Display campaigns you can add display keywords, placements, site behavior, topics,
in-market audiences, (custom) affinity audiences and
similar users to the mix.
Interface language
Demographics
(intent)
& weekday

22. Growing Complexity
More and more contextual signals to bid on
“If you're advertising in the US using the AdWords interface, you could potentially apply the
following bid modifiers:
• 17,000 cities
• Across six distinct blocks of time
• For each of the seven days in a week
• For users that have visited specific parts of your site before
• While factoring in devices.
There are over one million bidding combinations available to you on just one keyword in that
example. It becomes pretty difficult to scale that level of bidding precision when you’re
managing accounts with thousands of keywords.”
Google Best Practices

23. Building Your Ultimate Marketing Stack
Growing Complexity
Not just contextual user signals….

24. Limited Time
What’s the best use of your time?
Chris Haleua – Advanced bidding

25. Bidding Principles

26. Bidding Principles
1. For the sake of simplicity: accept that conversion rates do not vary (much) per position.
2. Therefore, do not bid for a specific position, but do acknowledge that 85% to 95% of the
clicks come from top positions, as you can see for yourself:
Google ‘Other’ got 41% of the
impressions, but just 4% of the
clicks.
Search Partner ‘Other’ got 65%
of the impressions, but just 14%
if the clicks.
Clicks | Impr.

27. Bidding Principles
3. Use value per click (VPC) + your efficiency target to guide you in setting bids.
In other words: what you’re willing to pay for a click is linked with what it’s worth to
you. You can bid a bit higher than your VPC as your actual CPC will be lower than your
max CPC.
• VPC for CPA targets:
(conversion rate) × target CPA
• VPC for ROAS targets:
(average revenue per click) / target ROAS

28. Bidding Principles
4. To calculate bid adjustments for segments*) at the campaign level, compare the
significant performance of that segment (e.g. 10+ conversions) with the campaign
average.
Calculation for CPA bid adjustments:
100 × ((conversion rate of segment / avg. campaign conversion rate) -1)
Calculation for ROAS bid adjustments:
100 × ((conv. value per click of segment / avg. campaign conv. value per click) -1)
These calculations use conversion rate and conv. value per click instead of CPA and ROAS. The former is
more stable (less frequent adjustments needed) but the latter is more optimal (but also more sensitive
to auction dynamics as Quality Score and competition, so it needs more frequent adjustments).
Read 3 Advanced Tips For Bid Adjustments In Google Enhanced Campaigns for more background on
this topic & corresponding script for mobile bid adjustments based on ROAS.
*) segments are: devices, locations, times and audiences

29. Bidding Principles
5. Determine a ‘conversion-less’ threshold in terms of clicks (preferred) or cost that you
accept before pausing a keyword, ad group, placement, etc.
E.g.: 2 × the average number of clicks needed for a non-branded conversion.
If your non-branded conversion rate is 2%, this amounts to:
2 × (1 / 2%) = 2 × 50 = 100 clicks.
So in this example, you pause after 100 clicks and 0 conversions.
6. Also wait at least 1 full conversion cycle before making any decisions about new
keywords, ads, placements, etc.

30. Bidding Principles
To Summarize
• Conversion rates do not vary (much) per position
• But 85% to 95% of paid search clicks come from top positions
Accept
• Value per click with efficiency target to calculate Max CPC
• Segment performance with campaign average to calculate bid adjustments
Align
• How many non-converting clicks are acceptable to you
• How long a full conversion cycle takes
Determine

31. Finally: the Framework

32. The AdWords Bidding Framework
Match your bid strategy with your monthly non-branded conversions

33. The AdWords Bidding Framework
Human & Machine work together to increase Ad Rank
Quality Score (>40%)
•Expected CTR (39%)
•Landing Page
Experience (39%)
•Ad Relevance (22%)
Bid (50%)
•Conversion rate and/or revenue per
click for each (combination of):
•Query
•Device
•Location
•Time
•Audience
•Etc..
Hacking Google’s Quality Score Formula:
blog post & webinar
Ad Extensions
(<10%)
Spend a lot of
time on
improving
these (creative
work for
humans)
And let the
machines crunch
these numbers
(iterative, data-
intensive, real-
time analysis to
be automated)

34. The AdWords Bidding Framework
Increase in Quality Score: being above average pays off
Hacking Google’s Quality Score Formula: blog post & webinar
+ +
+
+
+
+
+ 1 = 10
+ 1 = 5.5
+ 1 = 1
Ad Relevance issues? Check out Bing Ads heat maps (SlideShare / image search).
… until it hurts your conversion rate.

35. Appendix

36. Appendix: Free Rules & Scripts
By Chris Haleua:
• 3x3 Performance segments presentation
• Bid Rule playbook
• Bid Rule template library
• 3x3 Template
• 3x3 Macro
AdWords Scripts collections & articles (there’s overlap):
• RankHammer’s AdWords scripts compilation (over 140 scripts)
• Koozai: 100 Google AdWords Scripts You Should be Using
• FreeAdWordsScripts.com
• Google Developers: AdWords Scripts Solutions
• Search Engine Land: AdWords Scripts articles
• Optmyzr Scripts
• Brainlabs: AdWords Scripts articles
• PPC Hero: AdWords Scripts articles

37. Appendix: Bidding Tools
Free:
• Google’s own bid simulators
• Combine these insights with the Tenscores bid calculator
• And obviously all the bidding options within AdWords. Be sure to read their automated bidding
guides for search and display.
Mid Market ($10,000 - $100,000 monthly spend):
• Acquisio
• Adobe Media Optimizer Standard (not Premium, that’s enterprise)
• Marin Professional
Enterprise ($100,000+ monthly spend):
• Download this guide for a 50-page report on 9 enterprise paid media campaign management
platforms (Acquisio, Adobe Media Optimizer, Campanja, DoubleClick Search, IgnitionOne,
Kenshoo, Marin Software, QuanticMind and SearchForce).
• Tough questions to ask 3rd party tools from Chris Haleua on slide 46
and slide 47 of his Hero Conf Philadelphia presentation.

38. Thank You!