What does increasing your bid do?

8 years ago

Hi, Karmadog

Yes, in general it means you can receive more traffic. PPC works like an auction.

For example, for search advertising a higher bid means higher ad position.

The best bid is the one which is the most profitable for you. You should never really leave it alone but your goal is to set it at the level which gets you enough conversions for a price you can afford.

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karmadog

8 years ago

Originally Posted by Bright Future

Hi, Karmadog

Yes, in general it means you can receive more traffic. PPC works like an auction.

For example, for search advertising a higher bid means higher ad position.

The best bid is the one which is the most profitable for you. You should never really leave it alone but your goal is to set it at the level which gets you enough conversions for a price you can afford.

I get it now, but there must be some end point when increasing your bid won't make a difference anymore, how do you know when you've reached that stage?

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jamescanz 8 years ago

Originally Posted by karmadog

I get it now, but there must be some end point when increasing your bid won't make a difference anymore, how do you know when you've reached that stage?

You might not know where that end point is...

Because you can always bid higher.

That's why I recommend always moving up bids per click slowly...

And it it's bringing in a steady stream of clicks, then I usually keep it.

If you're using Facebook...

They do that for you automatically (depending on how you set up your campaign).
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darrylnyk 8 years ago

Thank you for the specific and detailed explanation. Really did help a lot!
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LucidWebMarketing

8 years ago

Increasing bids does not guarantee more impressions which is what you are implying (you used the term “scale up”). The impressions (and thus clicks) will depend on your QS. Google will not give you more impressions just because you are willing to pay more if you have poor QS. And if there are many competitors with better quality, even less so.

Since higher positions get a higher relative CTR, you will get more clicks for the same number of impressions. Maybe that's what you mean by scaling up.

But position is not given solely based on bid. The QS is taken into account. Basically, your bid and QS are multiplied and the highest one gets the top position.

Now, always assume that there are some with great QS (8-10). Also assume that the majority of advertisers will bid a typical range for the keyword. Say the going rate for a keyword is $0.50, maybe 60-70% will bid in the $0.40 to $0.60 range, with maybe 20-30% bidding lower than $0.40, probably most of them much lower than that. Occasionally, you'll have some bidding $1 or twice the average. How long they stay at that bid is another thing but you'll always have those doing so.

So what happens will depend on your QS, your bid relative to the average and that of competitors around you.

For argument, let's say you have average QS (5) and bidding an average amount ($0.50). That gives you an ad rank of 250. Assume there are a few also bidding the average but with QS of 9 and 10. That gives them an ad rank of 500. You have to bid $1 to position as well as them.

If doesn't mean you would pay $1, given the numbers, you'd pay around $0.50 but they may be paying less, especially when you are their competitor.

But say your QS is 10 and those with the same QS bid the average rate except you at $0.25. Increasing your bid to the average means you are joining them at the top more often. What you paid before depends on who your competitors were and their ad rank. If their ad rank was 150, you'd pay about $0.15 with a QS of 10. But who knows? You may be paying closer to $0.25, it depends.

But increasing your bid to an average value means you are joining the elites at the top. They are now your competitors and your CPC would be closer to $0.25. If you were already paying near that amount, the advantage would be getting better positioning thus a higher relative CTR.

Now if that increases your CTR by 100%, I'd take a small increase in CPC and even a 67% increase in CPC any day. This is really the root of your second question. How much more traffic are you getting (as a percentage say from 4% to 5% which is a 25% increase) and how much percentage in CPC that incurred. If the first is the same or higher, it's worth it. Of course, none of this matters if you don't monetize your traffic.

The whole thing is in constant flux. The above scenarios assumes fixed value variables which of course doesn't happen in the real world, at least not for very long.

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susanlisa

8 years ago

The right bid for you will depend on the cost of your keywords, the type of campaign you're running, and your profits.

Most people starting out in AdWords use cost-per-click bidding to pay for each click on their ads. With this option, you set a maximum cost-per-click bid (max. CPC bid) that's the highest amount that you're willing to pay for a click on your ad. Set your bid by thinking about how much an ad click is worth to you. If you’re unsure what bid to start with, try setting a max. CPC bid of US$1.

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dburk 8 years ago

Hi karmadog,

The primary reason you might "increase your bid" is to improve your ad position within the ad platform's auction system.

The closer you ad is to the top of the web page the more viewable impressions your ad will receive, and the more likely you are to receive a click on your ad. For that reason ad platforms typically auction off each ad position to the advertiser with highest ad rank score. Your Ad Rank score is calculated by multiplying your quality Score by your Maximum CPC bid.

Increasing you Max. CPC bid tends to increase you ad position, which in turn increases the traffic you receive from ad clicks.

And how do you know when you've raised the bid high enough to leave alone?

It's up to you to decide if your bid is high enough, and the best answer will vary based on the goals of your advertising campaign.

If your goal is to get as much relevant traffic as possible then you may want to bid high enough to place your ads in the top ad position. You can determine if you have adjusted you bid high enough by looking at the report data to see if your average ad positions are not less than 1.0 and that your Exact Match Impression Share is close to 100%.

However, if you goal is to make as much profit as possible then you would need to test the volume and conversion rates for each ad position and calculate profit for each ad position using the following formula:
(Value-per-click - the Cost-per-click) * Total Clicks = Total Profit

You would then need to adjust you bid up or down until the Total Profit is optimized.
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randyman

8 years ago

When you increase your bid, your network (google, FB or whatever) will prioritize to serve your ads more.

If we're talking CPM, they will not care whether anyone click or not. But if it's CPC, they will look at your CTR.

If your CTR is lower than competitor, they will prioritize anyone with highest bid plus CTR. Their formula is very simple really: who can bring the most $$$ to them.

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dburk 8 years ago

Originally Posted by randyman

When you increase your bid, your network (google, FB or whatever) will prioritize to serve your ads more.

Hi randyman,

Increasing your bid will increase your ad rank score, and likely increase your average ad position, but often does not increase your ad impressions.

While it is true that you might see your ads served more frequently if you increase your bid, that certainly is not always true. In fact, for any budget restricted campaign your ads will tend to be served less frequently as you increase your CPC bid.
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