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Posted on October 3, 2009

Keep Reducing Keyword Bids

Keep Reducing Keyword Bids
Posted on October 3, 2009

When a keyword converts at a cost which exceeds the targeted CPA, when do you give up on the keyword, and when do you stick with it?  The primary consideration should be relevancy.

Don’t Give Up on Relevant Keywords

If you believe a keyword is highly relevant, then don’t give up on it by pausing it.  Instead, just keep decreasing its bid until you find the price at which it converts efficiently.

An example is “Tax Attorney.”  Such a keyword can cost between $25 to $50 per click.  If you’re a tax attorney bidding the term at $50 per click, and have a target of $500 per lead, then you’re going to have to convert it at a 10% rate to achieve your target.  If you’re converting the term at a rate of only 2%, then you either have to give up on the term or bid it lower.

What if you bid the term at $10 with a 2% conversion rate?  You’ll lose most of the relevant impressions, due to rank, meaning your ad won’t usually be displayed, but when it is displayed and converts, you’ll hit your target of $500 for the lead.  So, rather than pause relevant keywords, just drop the bids.

Improve Conversion Rates

Of course, if you can improve your conversion rates, then you can afford higher bids, which will lead to higher traffic.  So with the above example, when you drop your bids for a highly relevant term, resulting in double digit ad positions, you should be asking yourself, “why is this advertiser unable to compete for a highly relevant term in first page search results.”  Investigate competitor ads and websites, and make some recommendations for improving the conversion rates.

Give Up on Keywords with Tangential Traffic

Dropping bids for terms which have problems with tangential traffic won’t work–you’ll have to pause the term.

An example is the term “A/C pad”  which can refer to a pad for a broken collarbone; the A/C element of the keyword refers to the “acromioclavicular” bone.  Of course, since only people who have gone to med school can spell acromioclavicular, the device is widely referred to by laymen as an A/C Pad.  Of course, if you own an air conditioner with a pad type filter, then you also use the term to buy a replacement part for it.  And if you search for the term, you’ll find air conditioner dominates the search results by a large margin, with the first entry relating to the medical version not ranking in the results until the second page, item 16.

Bottom line, if you’re selling acromioclavicular pads or some other such item plagued by tangential traffic, you’re not going to be able to compete for your shortest search phrases, your best bet is the longer more precise phrases.

Ad Position Targets Take a Backseat to Performance Targets!

The concept of targeting ad positions should be applied to performance classes.  Develop one (best) target for your best performing keywords (like those in a Star campaign) and worse targeted positions for other groups.  This is essentially what most bidding algorithms do.

Regardless, you must deviate from your position targets to accommodate your performance targets.

Average Ad Positions

If a keyword is highly relevant, rather general, and highly competitive, it may be tough to convert it efficiently.  Or maybe not . . . maybe the problem isn’t the keyword, just the bid.

A few weeks back I was speaking with our Google Rep about our aversion to targeting second page ad positions.  She said:

“Don’t think of it as targeting the second page; rather think of it as targeting below the fold first page positions when and where competition is low, like at night and outside metro areas.”

AHA!  I see the light.  So much for our aversion to second page positions.  RIP!  I’ve since lost my superstitious bias against second page bids!  So, my new favorite targeted position for relevant keywords which are under-performing is 13!  Now I’m not alarmed by double digit keywords.

Is an account being carefully maintained?  Let’s assess that on the basis of whether there exists a logical correlation between bids and conversions!

Any Relevant Keyword, for a Price

If a keyword is relevant, then there must some amount at which we are willing to bid for it.  This is akin, albeit converse, to the old adage, everything is for sale, for a price.  The concept is truly liberating.

Bottom line for most accounts:  just keep bidding lower on relevant keywords until they convert at the targeted CPA.