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The Definitive Framework
for Bidding in AdWords
Wijnand Meijer
Sr. PPC Strategist | iProspect | @ wijnandmeijer
Agenda
• About me
• Disclaimer: “Great bids can’t fix a lousy campaign”
• Prerequisites for bidding:
• Sophisticated Goal ...
About Me
• Sr. PPC Strategist at iProspect Amsterdam
• Started with PPC in 2006 for SMB accounts
• Joined iProspect in 200...
Disclaimer
“Great Bids Can’t Fix a Lousy Campaign” - Craig Danuloff,
2010
From his great eBook 21 Secret Truths of High Re...
Prerequisites for bidding
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...
Goal Setting: Fixed Budget
“Spend € 50.000 / month no matter what”
Required reading for anyone still on a fixed PPC budget...
Goal Setting: Fixed Budget
50 liters please, hope it gets
me where I need to be this
month!
Goal Setting: Fixed Budget & Efficiency
What’s even worse than a fixed budget?
“Spend € 50.000 / month AND hit my target C...
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 circumst...
Goal Setting: Fixed Efficiency
“Hit my non-branded CPA target of € 50 no matter what.”
The good: you can focus all your ti...
Goal Setting: Fixed Efficiency
I’m only interested if I can
drive 16 km with each
liter of petrol
Goal Setting: Profit-driven
Bid for the combination of volume (conversions or revenue) and efficiency (CPA or
ROAS) that d...
Goal Setting: Profit-driven
Which car would give
me the best value for
money?
Proper Tracking
What gets measured gets done
How do you measure conversions, revenue or profit?
More like this?
Or more li...
Multi-Channel Attribution Modeling: The Good, Bad and Ugly Models
Multi-touch Attribution
Give credit where credit is due
...
Multi-touch Attribution
Aaron Levy - What’s the best attribution model For PPC?
Multi-touch Attribution
What’s ‘the best’ model?
• According to Google it’s data-driven attribution. Worth trying if you’r...
Prerequisites for bidding
To Summarize
Don’t
Work with a fixed budget
Track the first online sale or lead only
Use last cl...
Complexity & Limited Time
Growing Complexity
More and more contextual signals to bid on
With Display campaigns you can add display keywords, placeme...
Growing Complexity
More and more contextual signals to bid on
“If you're advertising in the US using the AdWords interface...
Building Your Ultimate Marketing Stack
Growing Complexity
Not just contextual user signals….
Limited Time
What’s the best use of your time?
Chris Haleua – Advanced bidding
Bidding Principles
Bidding Principles
1. For the sake of simplicity: accept that conversion rates do not vary (much) per position.
2. Therefo...
Bidding Principles
3. Use value per click (VPC) + your efficiency target to guide you in setting bids.
In other words: wha...
Bidding Principles
4. To calculate bid adjustments for segments*) at the campaign level, compare the
significant performan...
Bidding Principles
5. Determine a ‘conversion-less’ threshold in terms of clicks (preferred) or cost that you
accept befor...
Bidding Principles
To Summarize
• Conversion rates do not vary (much) per position
• But 85% to 95% of paid search clicks ...
Finally: the Framework
The AdWords Bidding Framework
Match your bid strategy with your monthly non-branded conversions
The AdWords Bidding Framework
Human & Machine work together to increase Ad Rank
Quality Score (>40%)
•Expected CTR (39%)
•...
The AdWords Bidding Framework
Increase in Quality Score: being above average pays off
Hacking Google’s Quality Score Formu...
Appendix
Appendix: Free Rules & Scripts
By Chris Haleua:
• 3x3 Performance segments presentation
• Bid Rule playbook
• Bid Rule tem...
Appendix: Bidding Tools
Free:
• Google’s own bid simulators
• Combine these insights with the Tenscores bid calculator
• A...
Thank You!
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Hero Conf London 2016 - The Definitive Framework for Bidding in AdWords

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When it comes to setting bids in AdWords, you have more options than you may realize: manual CPC, enhanced CPC, automated rules, AdWords scripts, bid simulator, bid adjustments, smart bidding with target CPA or target ROAS and of course automated bidding with 3rd party solutions.
So the question arises: when should and shouldn’t you use each of these bidding methods? In this presentation, you'll discover:

- Why great bids can’t fix a lousy campaign

- What it means to be truly profit-driven when it comes to bidding (less than 10% of advertisers work this way)

- When it’s best to use each of the mentioned bidding options, based on a new framework for bidding in AdWords

Publicado en: Marketing

Hero Conf London 2016 - The Definitive Framework for Bidding in AdWords

  1. 1. The Definitive Framework for Bidding in AdWords Wijnand Meijer Sr. PPC Strategist | iProspect | @ wijnandmeijer
  2. 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. 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. 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. 5. Prerequisites for bidding
  6. 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. 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. 8. Goal Setting: Fixed Budget 50 liters please, hope it gets me where I need to be this month!
  9. 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. 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. 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. 12. Goal Setting: Fixed Efficiency I’m only interested if I can drive 16 km with each liter of petrol
  13. 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. 14. Goal Setting: Profit-driven Which car would give me the best value for money?
  15. 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. 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. 17. Multi-touch Attribution Aaron Levy - What’s the best attribution model For PPC?
  18. 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. 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. 20. Complexity & Limited Time
  21. 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. 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. 23. Building Your Ultimate Marketing Stack Growing Complexity Not just contextual user signals….
  24. 24. Limited Time What’s the best use of your time? Chris Haleua – Advanced bidding
  25. 25. Bidding Principles
  26. 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. 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. 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. 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. 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. 31. Finally: the Framework
  32. 32. The AdWords Bidding Framework Match your bid strategy with your monthly non-branded conversions
  33. 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. 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. 35. Appendix
  36. 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. 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. 38. Thank You!

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