Google Ads Bidding: How To Spend Less & Outperform Competition

[fusion_dropcap boxed=”no” class=”intro_dc” id=”” color=”#222222″]D[/fusion_dropcap]o you want your business to appear first in every search result for the keywords that bring you the most business? Of course you do! But unless you have bottomless pockets, it can seem hard to win against competitors. Luckily, there are ways to be competitive in the Google ads bidding auctions without spending more!

Listen, you’re probably using Google Ads to grow your business. Part of that is to make more money on ads than your spending. And if you’re like most businesses, you can only afford to pay so much for clicks and conversions before you stop profiting.

So what would you do if I told you how you could start lowering your CPC (cost per click) and your CPA (cost per acquisition) using the right bidding strategy? Keep reading, because that’s exactly what I’m going to show you how to do.

Before you dig into Google Ads bidding strategies faster than a hot dog competitor you’ll want to have a solid understanding of how Google Ads processes your bids in the Adwords auction.

A higher bid does usually place you further up on the page, but it’s not the only factor Google considers. The Google Ads auction runs more than 60,000 searches per second. In addition, it determines how your ad will rank in the blink of an eye. How? Using the following factors: max cost per click, quality score, ad format, ad extensions, and bid modifiers.

The actual position of your ad is determined by taking all these factors into consideration. This means you can outrank your deep-pocketed competition by having superior quality scores, correctly formatted ads, more relevant ad extensions, and well-placed bid modifiers, even if your max CPC is lower. Let’s review these before we dive into bidding strategies.

Your maximum cost per click tells Google the highest amount you’ll pay for a single click on your ad. If you pay more, your ad will rank higher. However, other factors will impact your ad rank, so tread cautiously and monitor your CPA (cost per acquisition). A too-high max CPC may dig a hole in your profit margins.

Your ads quality score is directly tied to your expected CTR (click-through rate), your ad relevance, and your landing page relevance. The best way to improve your CTR and ad relevance is to implement SKAGs (single keyword ad groups). This will allow you to write more relevant ad copy and attach keyword-specific ad extensions. We’ve written a more in-depth article about SKAGs here, but the basic rules for creating SKAGs are as follows:

• One keyword per ad group
• Three keyword match types per ad group (broad match modified, exact match, and phrase match)

Your ads rank partially depends on the ad format. Think of ad formats like you would a boxers weight class. Your ad will be competing specifically with other ads in the same format. However, some ad formats are shown above others based on the relevancy of that format. For example, shopping ads will often appear above search ads for shopping-related queries. You have eight different ad formats on the search network alone and over ten ad formats to choose from in total. Most of the time you’ll be using Search Network – Standard or Display Network – All Features, but in case you’re curious about the other options you have I’ve posted a list of all ad formats available.

Search Network with Display Select

• Standard
• All features

Search Network only

• Call only
• Mobile app installs
• Standard
• All features
• Dynamic search ads

Display Network only

• All features
• Marketing objectives > Install your mobile app
• Marketing objectives > Buy on your website

While ad extensions don’t affect quality score by themselves they can improve your click-through rate which will, in fact, improve your quality score. Ad extensions get their very own part of the Google ad rank equation. To have the highest possible ad position you’ll want to ensure the use of specific, relevant ad extensions whenever possible.

Google’s search network allows for 16 total ad positions with 1-8 generally appearing on the first page and 9-16 on the second. The average position column shows you where your ad appeared in comparison to other ads competing for the same keyword. But you don’t want to be obsessed with always being the top spot. Being number one all the time may not be your best strategy and if you are showing an average position of 1.5 or higher. Chances are, raising your max CPC won’t get you more impressions or improve your CTR (click-through rate). If your end goal is to be profitable, CPA (cost per acquisition) is the most important factor for your PPC success.

Remember what Theodore Roosevelt said? Of course, you don’t, that’s what Google’s for.

Teddy said: “Nothing in the world is worth having or worth doing unless it means effort, pain, difficulty…”

You get the point. Well, the saying proves true when it comes to bidding on Google Ads. Manual CPC will be more time consuming and take more effort than the automated bidding strategies available to you, but it also gives you a lot more control. And we’ve discovered that when it comes to Google Ads, more control usually means more bang for your buck.

Don’t let the idea of manually setting bids overwhelm you. Here are a few rules of thumb for manual bidding:

• Your average max CPC for any given keyword in the campaign should be around 10% to 20% of your daily budget for that campaign.
• You don’t need to do much research as its mostly a waste of time. There is a pay to play rate for most keywords and the best strategy is to start low and gradually raise your bids.
• You don’t need to set a different bid for each keyword match type immediately. Wait until you have some data to back up your bidding decisions.
• You have two different bidding levels:
  • Ad Group Level – Set the same bid for every keyword in the ad group
  • Keyword Level – Set specific bids for each keyword and keyword match type

Assuming you’re using SKAGs (single keyword ad groups) you can start by setting a max CPC bid on the ad group level so that each keyword match type has the same max CPC bid. Then you can monitor how performance differs for each keyword match type and adjust the bids higher or lower on a keyword level according to the performance of that match type.

Since your budget dictates what you can bid I’ve included a sample budget in the example below to help get you started:

Budget: $25/day
Keyword: Chiropractor Near Me
Max CPC: $2.50

After your campaign has been running for several days, you may start to see some bidding discrepancies on the keyword level. To gain a better understanding of how your bids are faring in the Adwords auction, you’ll want to add the Avg. Position column to your keywords table.

Your instinct may be to skyrocket the bid for a keyword that has a low average position, but that may not be the best move as there are many factors to take into consideration before increasing or decreasing a bid. Most of these considerations rely on the keywords match type and CPA (cost per acquisition) and have little to do with your average position.

• Exact Match – If your avg. position is low, and your CPA is below your target then you’re usually safe to increase the bid. On the other hand if your keywords avg. position is low, and your CPA is too high you want to lower the bid and seek out some of the different more advanced strategies covered further down in this article.

• Phrase & Broad Match Types – Before making any bid adjustments to keywords with the phrase and broad match type you should check your search terms report as these match types will continuously mine new keywords that should be added as a SKAG before the bid is increased for that keyword. Using this process, you should eventually end up with a near 1:1 keyword to search term ratio which will allow you to bid accurately on each keyword. There are some obvious exceptions to this rule, for example, if you’re not getting enough impressions because of an extremely low ad position then your usually safe to increase your bid unless it would exceed your target CPA by doing so.

Your bid adjustments might look something like this:

Goal/ Target CPA: $50.00
Ad Group Max CPC: $2.50
Keyword: [Chiropractor Near Me] Avg. Position: 3.5 CPA: $30.00
Bid Adjustment: +20%
Keyword: “Chiropractor Near Me” Avg. Position: 3.5 CPA: $40.00
Bid Adjustment: +10%
Keyword: +Chiropractor +Near +Me Avg. Position: 2.5 CPA: $55.00
Bid Adjustment: (-10%)

Be wary of common bid adjustment issues.

Depending on the search volume of keywords in your campaign you may need to increase your budget or lower your bids to prevent the dreaded “limited by budget” notification. Be careful when decreasing bids as you will eventually eradicate any chance of appearing in search results. Also, you shouldn’t assume that increasing your budget or lowering your bids will solve the problem. When you find that your campaign is limited by budget, it could be an indicator of other more serious issues.

For example, you may be paying for junk clicks that are wasting your budget, and by increasing your budget, you’re only further indebting yourself to wasted ad spend. Spending fifteen minutes creating a negative keywords list could be the solution in this case. Or maybe you’ve let a treasure chest of search terms rack up in your search terms report and separating those terms into SKAGs will improve quality scores and may lower your cost per click.

If you’ve already checked your account for the previously mentioned issues, raising the budget isn’t an option, and lowering bids any further will send you to the island of lost toys then you want to use a different strategy to target these expensive keywords. This strategy is called RLSA (remarketing lists for search ads), and I’ll cover it extensively in the next few sections.

Bid modifiers stay true to their name and give you the opportunity to modify your original bid allowing you to apply an increase or decrease to your original max CPC if and when certain conditions are met. You can use bid adjustments to decrease bids by as much as (-90%) or increase bids up to (+900%). And luckily for you, Google Ads gives you plenty of conditions to choose from. The most common bid adjustments are:

• Type of Device (Desktop/ Mobile)
• Day of Week/ Time of Day
• Calls
• Geographic Location
• Demographics (Age, Gender, Household Income)

I strongly recommend taking a look at your time of day report because you may be able to find some quick savings by eliminating some non-profitable hours. This may also help if you’re currently dealing with the “limited by budget” notification.

RLSA (remarketing lists for search ads) is a feature for search ads that allows you to customize your ads and bids for people who’ve already visited your website. Here are a few rules you need to be aware of before using RLSA:

• The audience size must be 1000 or greater before it can be used
• Import audiences from Google Analytics or customer email lists
• Increase bids up to 900% decrease bids by 90%
• Choose observation or targeting settings

RLSA bidding opens up a whole new world of strategies that can add a ton of leverage to your Adwords account. Here are a few of our favorite RLSA strategies.

Depending on what industry you’re in you may find broad search terms are too expensive for you to bid on without draining your ad budget at warp speed.

If this describes your situation, then RLSA gives you more than one way to remedy the problem. You can lower your bids on these expensive broad terms even if it takes you off the first page of results. Then add the appropriate bid modifier to shoot you up to the top when a searcher has been to your website previously. This will drastically lower your impressions for these search terms so you’ll want to take advantage of cheaper clicks via social or display ads to drive traffic to your site. Now you can use RLSA to serve search ads to past visitors who will be more likely to convert.

Bidding on your competition’s branded search terms will almost always be expensive, and you may find that it costs you more than your getting back. You can use RLSA to target ads only to searchers who’ve been on your website before then utilize a more aggressive bidding strategy as your ads will only be shown to searchers that have been on your site before and are more likely to convert.

You probably don’t want to pay for clicks from people who’ve already converted if the majority of your customers are one-time buyers. RLSA allows you to add a negative bid adjustment to visitors that have bounced from your page. Of course, you can tailor this to your needs by specifying how many times the visitor needs to bounce within a given amount of time to be included in your blacklist of bid decreases.

If you understand your customers and the steps they take on the way to a conversion, then you can really go all out on this one. This is ideal for warming customers by sending the right message at the right time. For example, you may want to bid cautiously on lower intent keywords to widen your net and start gaining the interest of customers still in the consideration phase. Then crank up the heat as the searcher becomes closer to making a purchasing decision. If you know visitors typically view multiple pages before converting your RLSA bid adjustments might look something like this:

Funnel Step 1.
First Time Visitors (+10%)
Funnel Step 2.
Viewed 3+ Pages (+25%)
Funnel Step 3.
Visited “Sign Up Page” (+50%)

Adwords scripts are basically the best thing since sliced bread. Not only do they save time but they are more thorough than any human can possibly be which means there’s less margin for error. You can find a myriad of AdWords scripts around the net to help you with everything imaginable, and that can be overwhelming so here are two of our favorite scripts to help you save time and bid smarter!

You didn’t already add every hour of every day into your AdWords account, did you?

Well for those of you who didn’t, Brainlabs has you covered with their 24/7 bidding script. It allows you to enter bid adjustments into a premade Google Sheet and customize your bids by the hour. You can find it here:

Brainlabs’ 24 Hour Bidding Schedule For Google Ads

If you’re like us and your accounts, have hundreds of ad groups and an even greater number of keywords then making bid adjustments could take years. But thanks to Klientboost, we have two scripts to solve that problem. The decrease bids script and the increase bids script, both of which require you to set up a filter before running them.

Klientboost Raise & Lower Bids Scripts

• Only raise bids if the CPA is lower than your target and the avg. position is lower than 1.5.
• Lower bids for keywords if the CPA is higher than your target.
• When deciding how to make bid adjustments sort your keywords by cost.  Make adjustments to the most expensive keywords first as this will have the greatest effect on your account’s performance

Whew! I know, I know, I’ve covered a lot in this article. Hopefully, you understand how much Google Ads bidding success is influenced by other factors like account structure and quality score. There are more bidding strategies we’ll cover, but this article is a wrap for now! If you have a bidding strategy that you’ve had success with, please tell us about it. Or have questions about specific bidding and budget topics? Leave your questions in the comments below!