Leveraging Bid Modifiers for PPC Success

Setting up a pay-per-click ad account on a search engine requires a lot of work. Consider this simplified checklist, which would be typical of a new campaign launch.

• Campaign name. Needs to be descriptive and fit established naming conventions.
• Campaign type. Where will ads appear? Do you want to include search partners?
• Budget. What are you willing to spend daily, weekly, monthly?
• Ad rotation. This will affect your ad testing and results.
• Delivery method. Can be standard or accelerated.
• Bid strategy. Are you controlling the bids or letting the platform take some liberties?
• Language targeting.
• Location targeting.
• Ad copy. Include at least two variations in each ad group to ensure you’re testing for optimal messaging.
• Keywords. Which match types will you target?
• Keyword bids. Tiered by specificity but also needing to meet certain thresholds for visibility.

And that is just to get a new campaign out the door. Then the work begins. You’re spending real money and you need to show a return.

You should dig into your data and start making smart optimizations. I could write an entire post about leveraging the search query report to improve keywords, and how to maintain a robust ad testing strategy. However, in this post I’ll focus on bid modifiers since they can be mathematically derived and are directly connected to your financial results.

What Are Bid Modifiers?

Years ago, if you wanted to bid differently for, say, California and Kansas you had to create separate campaigns for those geographic areas. This was also the case if you wanted different bids for mobile devices versus desktop-laptop computers versus tablets. You had total control over bids, but you also had a lot of virtually identical campaigns. Then Google announced Enhanced Campaigns for AdWords.

Enhanced Campaigns were met with much angst by the pay-per-click ad industry. This was mainly because Google grouped tablets with desktop and laptop computers. In fact, most PPC professionals have founded the ad results different on tablets than on desktops and laptops.

Regardless, Enhanced Campaigns introduced the concept of bid modifiers, which was helpful. This allowed an individual campaign to modify bids for different device types or geographies with a simple bid adjustment ranging from -100 percent to +300 percent. So how can you leverage these bid modifiers for better results?

How to Calculate Bid Modifiers

Bid modifiers are helpful because they can be calculated with simple math. As an example, consider this campaign in AdWords.

Bid modifiers — for Devices, in this example — simplify AdWords campaign management. Click image to enlarge.

Say the click-through rate and average position of mobile is similar to computers, but the cost-per-click and conversion rate are much lower on mobile. This is producing large difference in cost per conversion — mobile is much cheaper. There are two different approaches here.

• Lower cost per conversion on computers but maintain mobile. Start by lowering the default bids by, say, 20 percent, which will reduce your bid prices on computers. Then you add a positive bid modifier for mobile to counteract. If you started with a $1 bid on computers, the new bid would be $0.80. To modify the mobile bid back to $1.00, you need a 25 percent increase.

• Be more aggressive on mobile since it has a desirable cost per conversion. Just calculate the increase spending level based on the goal. If computers are meeting the goal, calculate the bid modifier by dividing computer by mobile. If the cost per conversion on computers was $9.62 and the cost per conversion on mobile was $5.74, the math would be $9.62/$5.74 = 168 percent. Therefore you would place a +68% bid modifier.

If the cost per conversion is higher on mobile than computers and you want to reduce it, use the same math as above and divide computer/mobile. This time you’ll get a percentage less than 100. Subtract from 100 and set as a negative bid modifier.

Setting and Changing Bid Modifiers

Bid modifiers for Locations, Ad schedule, and Devices are in the Settings area of your AdWords’ campaigns. Here’s a sample AdWords’ interface.

Bid modifiers for locations, ad schedule, and devices in the Settings area of your AdWords’ campaigns. Click image to enlarge.

The “Bid adj.” column will be visible by default and will appear as dashes if you haven’t set it. Just hover the mouse over the value until the cursor changes and you can edit these inline.

Remember these tips:

• The range is limited. Minus 100 percent on the low end effectively turns something off; the maximum increase is 300 percent.
• Locations and ad schedule modifiers will only show up if you’ve targeted them specifically.
• You can modify anything you can target, such as state, county, DMA region, city, and postal code.

In short, bid modifiers are a powerful way to optimize a campaign’s performance by device, location, or time of day without having to create new campaigns. Simply calculate the difference between your current metric and the goal and set modifiers accordingly.