So, you’ve added all your keywords, written some fantastic ads and linked each to relevant landing pages that are guaranteed to sell your business. It’s now time to decide on your AdWords bid management strategy.
You’re on a tight budget (let’s face it who isn’t) and your profit margins are small. The minimum bid for most of your keywords is 10 cents so let’s start there and work up – right?
A bid management strategy that starts with low bids on all your keywords will typically mean your ad position will also be low. This will translate into a low click-through-rate (CTR) for your ads and CTR is one of the most important factors in determining your Quality Score (QS). The lower your CTR, the lower your QS, the more you pay in bids.
When introducing a new keyword to your campaign, always start by bidding high to secure a top ad position on the search engine results pages (SERPs). Top ad positions typically get clicked on more often and this will help you too build up a good keyword history.
Remember, your keyword history can either make or break your AdWords advertising. Ensure your new keywords don’t start to build up a poor history right at the start or you’ll pay for it in the long run.
So, now you know that the smart thing to do is bid high to build up your keyword history. But what should you do next?
Suppose that you were to start bidding an average of $1.10 for a position #1 against a reasonably popular keyword.
Within a couple of days, you might find that you have a fantastic CTR, your QS is looking good and your average cost-per-click (CPC) has dropped naturally by 10 cents. Conversions are coming in, but you’re losing money fast.
The problem is that your AdWords bid management strategy is now hammering your advertising budget, and crippling your very small profit margin. You’re spending more on advertising than you make in profit.
Desperate to reduce your bid prices and make that all-important transition from cash-draining to comfortable profit, you drop your bid down to $0.95, so it is just below your average CPC?
Could be a bad move?
Your ad position will likely drop along with your CTR. And this could be fatal if you’ve not given Google enough time to fully fall in love with your campaign.
The safer option is to hold off dropping your bids for a couple more days. Then, each day, drop your bids a little bit at a time until you reach that vital balancing point between profits from conversions and costs per sale.
The same principles applies with your bidding strategy. Keep your nerve and hold that high ad position for four or five days at the start. Then drop your bid prices slowly and monitor your conversions often. Keep on dropping your bid price a little at a time until your ad position reaches that nice sweet spot between costs and profits.
Although this AdWords bid management strategy might be costly at the start, you’ll almost certainly get back all you’ve lost and more through lower bid prices in the longer run.