Digital marketing is arguably the most popular promotional method. Global digital advertising spending amounted to $521 billion in 2021 and is projected to reach $876 billion by 2026.
One of the methods used in digital marketing is pay-per-click (PPC) advertising. This method allows marketers to create advertisements on search engine results pages and various websites. However, PPC advertising can be complicated and intimidating, especially for beginners.
With this in mind, let’s dive deeper into PPC bid management. This article will discuss setting goals and bidding strategies for your advertising campaign, together with using various bid management tools.
What Is PPC Bid Management?
PPC bid, also known as keyword bids, is a digital advertising system where advertisers bid on a keyword or keyword groups to secure their ad space on relevant search results.
Therefore, PPC bid management is a process of managing your keyword bids to get the best result out of a PPC campaign.
Since PPC ads involve bidding on a pay-per-click auction, such as Google Adwords, it is crucial to understand PPC bid management to properly adjust and adapt your spending according to your campaign type.
To do so, start by learning these several ad bidding terms:
Cost-per-click or CPC refers to paying when someone clicks on your ad. The price is calculated every time your PPC campaign runs.
Several factors determine your CPC, including your maximum bid, ad quality, and search context.
CPM is a bid model where an advertiser pays per thousand impressions for their ad. Thus, instead of paying for clicks, you will pay for your ad showing up on search results or a particular web page.
Multiply the total impressions by the CPM rate and divide it by 1000 to calculate the ad cost in a CPM deal.
When using CPA or cost-per-acquisition, advertisers pay when the audience finishes the desired action, such as signing up for a mailing list, downloading a file, or making a purchase.
Thus, your ad performance is not determined by only how high your bid is. Instead, Google will calculate your ad rank by multiplying your maximum bid with your quality score.
How to Manage a PPC Campaign: Automatic Bidding vs. Manual Bidding
Mainly, there are two different ways of bidding for your PPC campaigns – automated bidding and manual bidding. Each option is suitable for specific situations and comes with advantages and disadvantages.
Automated bidding or smart bidding involves AI to optimize PPC bids according to your campaign goals. Automated bidding is excellent for businesses that lack the time or human resources to manage the bid but have enough budget.
Automated bid management helps advertisers be more time-efficient since the automation can handle many keywords and ad groups within a complex account.
Automation also creates specific subsections within a broad target audience easily. Therefore, you can bid for keywords for those subsections, and set up specific ad campaigns.
Additionally, bid automation provides accurate campaign predictions since it involves machine learning and algorithms. This helps formulate more effective PPC bid management strategies.
However, automated bid management also comes with some disadvantages. First of all, automatic bidding is not recommended if your PPC account doesn’t have enough historical performance data, decent traffic flow, and conversion volume.
Another disadvantage is that changes take time to sync, especially with Google Ads. You will need to manually sync the platform if you want immediate changes.
The AI also needs time to build and analyze data history. Therefore significant changes and an overly aggressive bid will negatively affect your PPC performance.
Manual bidding is a process where the advertiser manages their keyword bidding without the help of AI and algorithms. Manual bid management is best for a business with a limited budget that wants more control over its PPC bid management.
Using manual bid management, advertisers can quickly change their keyword bids. These changes will also take effect in real-time.
Manual bidding also allows businesses to make a more aggressive bid strategy to win the best place on a certain keyword. In manual bidding, a PPC manager has more control and less restriction over their PPC management.
Just like automatic bidding, manual bidding also has its disadvantages. Manually managing multiple campaigns, ad groups, and keyword lists can be time-consuming and not easy.
Managing bids manually is prone to human error, especially if a single PPC manager handles a large account with numerous keyword bids and makes bid adjustments.
As you can see, the best PPC bid management method depends on your goals.
PPC Bid Management Goals
Setting goals helps determine which strategy will work best for your business. In PPC bid management, advertisers typically try to achieve these three goals:
Increase Brand Awareness
One of the goals of launching a PPC campaign is to gain a larger audience. Brand awareness is the foundation of a business’s marketing funnel and the start of acquiring potential customers.
Drive More Traffic
An increased amount of traffic to your website indicates a successful marketing campaign. Website traffic opens up more opportunities for your business, including building trust and relationships with customers, generating qualified leads, and getting a better conversion rate.
Increase Sales or Leads
Increasing sales or leads is the ultimate goal of any marketing campaign. Gaining more awareness or retaining website visitors is just the first step for eventually converting them to customers.
Types of PPC Bidding Strategies
This section will go over several bid strategies to help achieve your business goals:
Target Cost-per-Acquisition (CPA)
Target CPA is one of the automated methods for managing bids used by some advertising platforms, including Google Adwords, Facebook Ads, and Microsoft. This method focuses on gaining new customers or leads at a specified acquisition cost you set beforehand.
In this strategy, your advertising platform will automatically adjust bids on each campaign based on your target cost. Therefore, it is crucial to make sure that you don’t set an impossible target and back it up with adequate revenue data.
The main advantage of using target CPA is that you only pay once your target audience finishes a certain action, such as downloading a file or registering for a mailing list. It is also best for bottom-of-funnel marketing since it is designed to drive more engagement.
Target CPA also comes with several cons. First of all, it usually costs more than most other PPC options. It also requires a good understanding of your target audience’s behavior, and it doesn’t necessarily guarantee a sale.
As of April 2021, Google Ads changed Target CPA into Maximize Conversions. However, there is no significant difference in bidding behavior due to this change.
Target Return on Ad Spend (ROAS)
Target ROAS is another type of conversion-focused bid management strategy. Google Ads and Microsoft use it to analyze your historical data to predict your return on investment.
Target ROAS works more or less the same as target CPA, except it uses your specified return on ad spend goal. A business must have enough budget and meet the minimum historical data required to use target ROAS.
For example, you will need to have at least 15 conversions within 30 days period to use Google Ads. However, we recommend starting after you have 30 conversions for the last month to maximize your performance.
When you apply this strategy to your campaigns, Google will give you a target ROAS amount recommendation based on your historical data. You should consider setting your target ROAS slightly lower than needed and increasing it gradually based on the data you got.
As of April 2021, Google Ads changed Target ROAS into Maximize Conversion Value. Users don’t need to re-learn bidding strategies since this new method works similarly to Target ROAS.
Target Impression Share
Target impression share bid strategy makes it possible for advertisers to show their campaigns in the specified place on the Google search results page. There are three positions to choose from:
- Top of the page
- Absolute top of the page
- Anywhere on the page
Google Adwords will make some bid adjustments based on your budget to make sure you get your chosen position as often as possible. Target impression share is best for improving your brand awareness by reaching a broader audience.
When your ad is placed in the ideal position, it has a better chance to get more clicks and views. Although it is not guaranteed, having your ad appear at the top of the page will certainly help it perform better.
Compared to other PPC strategies, target impression share is the most cost-effective way to place your ad at the top of SERPs.
One of the cons of using this strategy is that your CPC can get expensive. Therefore, it is advisable to set your maximum CPC before starting a campaign.
PPC Bidding Tips to Maximize Your Ad Spend
Managing bids for your PPC advertisements can be a complicated and overwhelming task. You might worry that your ad budget is not appropriate to reach your goal. Therefore, let’s take a look at five PPC bidding tips to optimize your ad spend.
Choose the Right Bidding Strategy
Marketers need to understand which bidding strategy to choose since they are suitable for a specific goal. Take time to analyze the strengths and weaknesses of each strategy and how they can help achieve your marketing goals.
Make sure you understand the fundamentals of paid search and PPC advertising. Without understanding the basics, your bidding strategies might get stuck in a cycle of poor performance.
Avoid Using Smart Bidding Without Enough Data
Smart bidding strategies use AI that analyzes your historical data and helps you maximize your ad performance. Because of that, a lack of data might hinder the AI’s ability to develop the best strategy for your PPC bidding.
Many platforms allow you to set smart bidding without any historical conversion data. They would rely on your competitors’ data to learn what strategy might suit your desired keywords.
However, there is little chance that this will work, especially if you target a unique niche or conversion action.
That is why it is recommended to use manual bid management for starters. Once you have enough data, you can switch to a more automated method.
Set Realistic Targets
Setting achievable and realistic targets for your bid management process is important to ensure your performance gradually improves. Even though bid strategies might seem convenient, they can’t reach targets that are too far away from your historical performance.
Consider sticking to 30% of performance over the past one to two weeks regardless of what platform you use. Setting your targets closer to actual performance can help bid strategies get more of a grip.
Set Bidding Caps
Using smart bidding without setting bidding caps may result in ineffective spending and bad ROI. This applies both for maximum and minimum bid values. Setting maximum bids allows you to control how much you’ll spend on campaigns, and minimum bids ensure you don’t bid too low and obscure your keywords.
You might be tempted to make constant changes to your bid strategies, especially when you notice that your strategy doesn’t perform as expected.
However, the system needs time to collect enough data and complete its learning process to settle on one particular strategy. Most platforms take a week to learn and compile enough data before establishing a more stable performance.
PPC Management Tools
Considering its complexity, most marketers use tools to help them manage tasks, such as PPC bids, keyword research, and performance tracking. Since numerous tool options are available, you might be confused about which to choose.
Therefore, let’s look at three tools to help you improve your bid management system.
1. Google Ads Editor
If you focus your PPC campaigns on Google Ads, then Google Ads Editor is your best option. This is a downloadable desktop application that has a similar interface with the Google Ads website.
Furthermore, this tool allows you to work offline and make bulk changes to your campaigns quickly and easily. Google Ads Editor also provides other essential features such as exporting or importing files and performance tracking.
Besides, it is a great option for beginners and small businesses since it is available for free.
Semrush is a popular brand that provides various online marketing software, including a keyword research tool. Knowing the best keywords to use is highly important for your PPC campaigns’ performance, and using Semrush can greatly improve your research process.
This tool also provides easy integration to various platforms, not only PPC advertising but also social media and website performance.
Semrush is available starting from $99.95/month if you opt for an annual subscription.
This is another tool to make your PPC management tasks a lot easier. Opteo allows you to operate Google Ads more efficiently and spend less time looking at performance data and make more effort to increase your conversions instead.
Opteo has numerous features that can boost your productivity. This includes keyword manager, ad creative improvement, and bid management tool. Opteo is a subscription-based service available starting from $99/month. They also offer a 30-day free trial to test it out.
Pay-per-click advertisement can be a powerful marketing method once you know how it works and the best strategy to practice. Since PPC advertising revolves around bidding, you should understand every nook and cranny of this method before using it for your business.
In this article, we have looked at the definition of PPC bid management, its possible goals, and different strategies to achieve them. We have also learned five tips to optimize your ad spending:
- Choose the right bidding strategy.
- Avoid smart bidding if you don’t have enough data.
- Set realistic targets.
- Set bidding caps.
- Be patient.
Now that you know more about the fundamentals of PPC advertising and the bidding strategies, it will be easier for you to create successful campaigns. Don’t forget to follow the tips presented in this article when making your online advertisements.