Google has been quietly introducing more options for bid adjustments recently to the AdWords interface. The addition of demographic bid adjustment options near the end of 2016, and more recently interaction adjustments has prompted Uprise to revisit our thinking and approach around using bid adjustments, especially when an account may also be using smart bidding strategies.
What Are AdWords Bid Adjustments?
AdWords bid adjustments are a manually set percentage change that allows users to up or down weight their max Cost Per Click bid amounts. This provides users greater control of when, where and to whom their ads show, enabling better targeting of segments based on their likelihood of converting. Thus removing the requirement to create individual ad groups for multiple segments and allowing them to be easily managed from within the same campaign.
The current segments that users are able to use adjustments on are outlined below:
AdWords Bid Adjustment Types
|Account Level||Type Of Bid Adjustment||Range||Network|
|Location||-90% – +900%||Search & Display|
|Device||-90% – +900%||Search & Display|
|Ad Scheduling||-90% – +900%||Search & Display|
|Remarketing Lists||-90% – +900%||Search Only|
|Interactions||-90% – +900%||Only On Campaigns created Inside New AdWords Interface|
|Device||-90% – +900%||Search & Display|
|Remarketing Lists||-90% – +900%||Search Only|
|Interests||-90% – +900%||Display Only|
|Age||-90% – +900%||Search & Display|
|Gender||-90% – +900%||Search & Display|
|Parental Status||-90% – +900%||Display Only|
Demographic Bid Adjustments
Demographic bid adjustments are one of the newer features to be included in the Adwords UI. They currently allow you to modify bids based on Age and Gender for Search traffic. AdWords has additionally introduced the ‘Parental Status’ demographic for display traffic as a third adjustment option.
Moreover, Google calculates these demographic segments by matching users online behaviour across Search, Google Display Network, and YouTube, and then matching that with people who have filled out surveys. Those users that Google is not 100% confident about fall into the ‘Unknown’ category (which is slowly shrinking as Google is able to collect more data and refine its algorithms).
Additionally, Google enables users in North America to target by Income Bracket. Unfortunately, as this relies on Google brokering agreements with 3rd parties to supply, this feature will likely take longer to reach New Zealand AdWords users.
The key to using Demographic targeting is to remember that very few people purchase as a direct result of demographics like their Age or Gender. Lisa Gevelber backs that up in highlighting that understanding the intent of potential customers is a more powerful way to predict the likelihood of a conversion. She goes on to use the example that some 40% of all baby product purchasers live in households without any children.
In saying that, I believe that demographic adjustments are a great tool for limiting spending in segments that fall well outside the target market, and have had success in using this as an indicator. For example, we have an adventure tourism client where there is a specific target market. Due to this, we have completely excluded the 65+ years of age category and severely down weighted anyone over 45 based on conversion data. Moreover, using such tools should be done so with caution, as research has shown when marketers rely on preconceived ideas we may accidentally limit our audiences by up to 45%.
Remarketing Bid Adjustments
Remarketing Bid Adjustments are arguably the most meaningful adjustments for account optimisers. They provide full control in creating custom segments inside Google Analytics rather than relying on broader segments like device or age. This user data can then be used either within the display network or through RLSA’s (Remarketing Lists for Search Ads), which allow you to manage your bids for people on your lists within the search network.
This feature could be used successfully in the creation of remarketing lists for individuals who have previously either converted and engaged with key content, or the opposite. Based on these custom characteristics one is able to judge their likelihood of generating remarketing revenue and set an appropriate bid adjustment.
Location Bid Adjustments
Location bid adjustments enable you to increase or decrease your reach into certain countries, regions or cities as required. Location adjustments are a great way to improve the overall conversion rate of your business. Furthermore, location bid settings are an easy way to shed light on potential areas where there is reduced brand awareness or issues with your reputation or supply chain.
Location bid adjustments while perfect for conversion rate optimisation can alternatively be used in more creative ways. For example, retail stores can choose to serve a different ad experience to users located within 500m of their store (direction based information being one example), compared to those located greater than 5km away who might prefer the call extension instead.
Interaction Bid Adjustments
Interaction bid adjustments are one of the newest features that Google have introduced. This handy new capability allows for users to adjust how often certain ad extensions are displayed in the paid search results. For example, if your business is great at converting phone leads compared to other forms of communication, you could utilize a positive bid adjustment for call interactions to increase impressions, in turn enhancing your overall conversion rate.
Ad Scheduling Bid Adjustments
Ad Scheduling is set at the campaign level and allows pre-set parameters for the day, and time of day, that your ads will show. By setting the ad schedule modifier to -100%, it allows you to pause activity completely for that block of time. Ad Schedule adjustments are perhaps one of the more straightforward adjustments to carry out due to being closely linked to a causation factor and easily checked. For example, an ice-cream seller may choose to pause all overnight ad activity and add a positive adjustment between Friday and Sunday, to heighten the reach of consumers when they are more likely to buy.
Moreover, for high-consideration products, this adjustment becomes less important as the pre-purchase cycle is much less defined. While some people might be away from their screens over the weekend, an equal number of people might use that as their research time. Additionally for high consideration items, late at night may well be a high performing segment for your business. Thus, it definitely pays to carefully check the data over a wide time period before committing to any change in ad scheduling.
When To Use Bid Adjustments
For those that have a small budget, bid adjustments are a great way to channel your spend into the areas that are the most likely to convert.
Alternatively, bid adjustments are highly useful on campaigns where the client has set an ambitious CPA target to reach as they allow for tighter control of your ad spend. There is no right or wrong approach to using adjustments to meet CPA targets, so we advise to test a number of strategies to see what works for your specific case.
Advantages of Using Bid Adjustments
A major advantage of using bid adjustments is that they don’t require separate campaigns to be created for each segment that you wish to target. This allows a consolidated account structure, making it easier to compare the overall performance of each campaign and distributed budget. This structure makes campaigns much easier to set up and make ongoing changes to as all the settings are located in the same place.
Strategies For Using AdWords Bid Adjustments
In many cases, account optimisers prefer to increase the bid adjustments on high performing segments and down weight bids on segments that underperform. In some cases this approach may be adequate to achieve your goals, however, it doesn’t take into account why people are converting in the first place.
Using this strategy could see you overpaying for easy conversions whilst creating a self-fulfilling prophecy for underperforming campaigns by dooming them to show ads only in lowly positions or at unattractive times of day.
So what’s the alternative?
The clue lies in average position. If an underperforming segment already has a low position, then it may need a positive adjustment to increase the ad rank. Although this strategy will lead to an increase in short-term costs, it is the only way to accurately compare it to other segments.
If, after this period, there is still a significant difference in CPA or Conversion Rate, then a negative bid modifier should be implemented and resources shifted to areas offering higher returns.
When Bid Adjustments Go Bad
With multiple bid adjustments possible at both the campaign and ad group level, the end result can be messy because the adjustments are applied subsequently. This is emphasized when there are positive and negative bid adjustments competing against each other.
Therefore, when dealing with multiple bid adjustments, optimisers need to take extra care to ensure that the outcomes match with their desired strategy.
For example a local bike shop in Wellington may have the following account settings in place:
Manual CPC Target – $2
Location – Wellington Region +15% | Outside of Wellington -25%
Device – Desktop +20% | Mobile -10% | Tablet +10%
Time of Day – 9am-5pm -15% | 6pm – 11pm +20% | 12am – 8am – 80%
Remarketing – Visited Site Before +40% | First Time Visitor – 0%
Now, try and answer this: What will the final bid amount be for a user searching for “Mountain Bike” in Auckland, on their tablet, at 2 pm who is familiar with the site?
Still Stuck? – Check the Answer at the end of the article.
Bid Adjustments & Automated Bidding
While some bid adjustments work together to create multiplier effects, others cancel each other out depending on the type or the bid strategy that may have been applied to the campaign, with some examples being:
- Location Bid Adjustments – Only the most specific bid adjustment will be implemented
- eg – New Zealand +20%, Wellington -10% results in only the Wellington bid adjustment being applied.
- Ad Scheduling – Can only be used with ‘Maximise Clicks’ automated bidding type.
- CPA Targeting – Rather than modify the max CPC, the target CPA is the amount adjusted.
- Target ROAS – The only modifier available is -100% which effectively pauses the campaign or ad group.
- Ad Group Adjustments – Ad Group level adjustments override Campaign level adjustments.
How Much Should I Set My Bid Adjustment To?
There is no hard and fast rule as to how much you should up or down weight different segments. However, we have developed some internal guidelines around best practice:
Firstly, if your average position is already high and you have no lost impression share, then there is little need to add positive modifiers as you are already reaching 100% of the audience.
In this instance, the goal is to try and find lesser performing campaigns where you can try and save budget to lower your overall CPA. Although, be careful not to handicap a campaign or ad group to the extent that it has no realistic chance of ever converting due to only being fed the scraps.
If this does become the case, either start the campaign again from scratch and try a different angle, or turn it off and focus your attention on growing your account in more profitable areas.
Calculating Bid Adjustments
If you are in a situation with a limited budget and low average positions, then it absolutely makes sense to use bid adjustments to increase the chance of being seen by the right people at the right time.
If you are unsure regarding ‘how much’, one handy method is to work out the difference in Conversion Rate or CPA from the campaign or ad group benchmark and use that amount as the modifier.
Conversion Rate Method For Device CPC Bid Adjustments:
|Platform||Max CPC||Conversion Rate||Device Bid Adjustment||Adjusted CPC|
The calculation used above is:
(Device Conversion Rate / Overall Conversion Rate) * Device Max CPC
In the above situation, we are saying that mobile traffic (for instance) has a 16% greater chance of converting, and therefore, we are willing to spend 16% more on this segment to maximise leads within our target cost per conversion.
Bid adjustments are a handy tool to reduce unnecessary spend on segments outside of the target market or to really squeeze the last few percentage points of performance out of an existing AdWords account.
The success of bid adjustments rely heavily on tracking how the final bid amount will be affected by multiple different adjustments, whilst additionally factoring in things like smart campaigns that are using an automated bid strategy.
Google is obviously keen to push the adoption of bid adjustments by increasing their presence in the new AdWords User Interface and improving the usability. Watch out for more updates in this space once we have had a bit more time to play around with the new look AdWords.
Mountain Bike Question Answer:
Modified CPC Bid Amount – $2.49
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13 June 2017