Chad Hetherington

Purchasing viewership for your ads rather than relying solely on luck seems great in theory (and it definitely can be). But PPC is not some sort of pay-to-win scheme; it still requires strategy. While you certainly can see near-overnight success with a PPC campaign in some very special cases, meaningful results still typically take time — about 3 months. That’s still considerably quicker than other forms of advertising.

So how can you make the most of your PPC strategy? Bidding is an enormous part of the PPC process. The virtual auction where marketers bid on keywords can make or break your ads’ success — no matter how well-designed they are.

Here, we’re exploring the PPC bid management process, including bid management tips, tricks and best practices to help you get the most out of your next campaign.

What is PPC?

Pay per click advertising is a form of paid advertising hosted on major search engines, social media sites and even online retailers. Some places you can run a PPC campaign include:

  • Google.
  • Facebook.
  • Amazon.

These are definitely the Big 3 in the PPC space, which also means competition can get heated. Which also also means there’s all the more reason to manage your PPC bids with courage.

On Google, for example, PPC ads are indicated by a little “sponsored” tag on search results pages. Formerly, the tag said “ad” but it’s neither here nor there. Well, to us, anyway. I’m sure there was at least a shaving of internal significance or reason for the change on Google’s end.

While talking about Google, it’s worth mentioning that among those “big 3” PPC ad platforms, Google Ads, formerly known as Google AdWords, is far and away the most popular. Its acclaim is also precisely why an auction even exists. Each results page has a limited number of paid ad spots that appear at the top, just before the organic results. So when deploying your PPC campaign and bidding on keywords, the goal is to win that topmost spot.

In terms of behind-the-scenes magic, your ad doesn’t live there permanently on that page in the background. Instead, when someone searches for the keyword you bid on (and hopefully won), your ad is triggered and served to that end user.

Needless to say, ads must contain a target keyword, in some form, to work. And because there are potentially thousands of businesses that are bound to be targeting the same or similar keywords, it’s the bidding process and your management of the campaign that can ultimately determine whether your ad is displayed or not.

Moving Onto PPC Bids and Bid Management

Before we get to bidding and bid management, there are a few terms that are worth reviewing and contextualizing so we have a better understanding of them later:

  • Cost per click (CPC): This refers to the dollar amount that you’ll pay for each click your PPC ads receive, and it’s determined by your bid. However, what you actually end up paying may be different. You can use the following formula to determine what a reasonable CPC is for any given keyword: (competitor ad rank / your quality score) + 0.01
  • Ad Rank: In the wise words of Google: “Ad Rank is a value that’s used to determine where ads are shown on a page relative to other ads, and whether your ads will show at all.” Your particular rank for any given ad is recalculated every time it’s triggered by an end user. Here’s the formula: Maximum Bid x Quality Score.
  • Quality Score: How worthy are you? OK, how worthy are your ads? This figure is determined by search engines and represents how deserving your ad is based on a few criteria, including keyword relevance, landing page quality, past SERP performance and CTR.
  • Maximum Bid: This is the most that you’re, theoretically, willing to pay for someone to click on your ad.
  • Click-through rate (CTR): This is the percentage of ad views, or impressions, that result in clicks. For example, if your ad was seen 5 times and clicked twice, your CTR is 40%. We can find that out by simply dividing the clicks by the impressions and multiplying by 100 to convert to a percentage.

The Bidding Process (aka the Ad Auction)

OK so, you know how auctions typically work; the highest bidder wins the merchandise. The same principle applies to PPC advertising — but there is one discrepancy. Unlike a traditional auction where you can see (or hear) others outbid you for that gorgeous mid-century modern coffee table you were after ( ), you do not have access to such knowledge here. You cannot know if your bid is higher or lower than others.

Here’s how it works, simply put:

  1. You set your desired maximum CPC at the keyword or ad group level.
  2. The search engine computes every bidder’s ad rank and (most often) serves the highest bidder to the end user.

However, you can do a little testing to get a good idea of whether someone has outbid you. Say you want to bid on the keyword “professional vintage furniture restoration,” and you’re willing to pay X amount of cents per click. So you make the bid but your ad isn’t being triggered very often on SERPs. Well, that’s a pretty good indication that someone else has a higher bid.

Before You Begin Bidding …

… you need to establish a few things, like your goals. What do you want to achieve as a result of the ad campaign?

Here are a few typical examples:

  • Brand awareness: This would entail maximizing impressions while minimizing cost per mile (CPM). That’s just a fancy way of saying the cost per about every 1,000 impressions or so.
  • Sales: If sales are your goal, you’ll want to generate conversions while maximizing your return on ad spend (ROAS).
  • Leads:  Here, you’ll want to maximize your total number of conversions while minimizing the cost per action (CPA). In this case, the action is a click.

You’ll also need to outline a budget. This is highly subjective and can vary greatly between organizations. What’s important is that A) your budget makes sense for the goals you’ve outlined and B) you’re not over and underpaying for any particular keyword.

And finally, consider the length of the campaign. How many days will you run it for? The longer it’s live, the more you’ll pay — considering you’re getting clicks.

Identifying these items before you kick things off can help you set realistic targets.

Bidding Strategies

Because Google is almighty, we’ll continue using it as an example. So, here are a few Google Ads-oriented strategies that can help you manage bids effectively:

  • Target cost per acquisition (CPA): This is a Smart Bidding strategy that does your bidding for you to drive as many conversions as possible.
  • Target ROAS or return on ad spend: Another Smart Bidding strategy, Target ROAS will determine if a user search is likely or unlikely to generate a conversion and bid high (or low) accordingly.
  • Manual CPC bidding: This strategy lets you set your own maxim cost-per-click for your ads. This method gives you the most control, but requires significantly more bid management than the other options.

May the Best Bids (Practices) Win

Now that you’re all the wiser about PPC campaigns — and, more specifically, the bidding process — it’s time to face the digital gavel without getting knocked out. Here are some best practices for PPC bid management:

  1. Set a cap: A bid cap places a hard limit on your cost per bid, which is usually the maximum you’re willing to spend for a conversion. This helps you limit your cost-per-bid while driving volume.
  2. Avoid using an automated bidding strategy: No, you shouldn’t avoid smart bidding like the plague. You absolutely should take advantage of it. However, if you don’t have enough historical data to feed the automated bidding algorithm, it’s not going to work at its full potential for your PPC.
  3. Feed bid strategies as much relevant information as possible: Organize keywords by both intent and semantics and ensure that what you’re telling the algorithm to look for aligns with your overall objectives.
  4. Set a minimum and maximum CPC: Setting minimum and maximum CPCs gives you control over your bids. A minimum threshold ensures that your keywords won’t become obsolete, while a maximum helps you keep costs within your budget.
  5. Don’t change bids too frequently: As fast as algorithms are becoming, changing bids too frequently doesn’t give them a chance to settle in and perform. That said, you absolutely should adjust bids for unique circumstances when something calls for it.
  6. Understand how bid adjustments work within bid strategies.
  7. Remember other conversion factors like landing page quality and tweak where needed to account for them.
  8. Test different strategies: The more strategies you test, the more likely you are to discover one that works best for you. Through trial, error and analysis, find the bid management strategy that makes sense for your keywords and goals.
  9. Don’t always aim for the top spot: Yes, the topmost spot is prime real estate for search engine optimization (SEO) and PPC in terms of ad placement. However, a profitable (and successful) PPC campaign is one that effectively balances cost and traffic volume. So aim for that!

Measuring Your ROI 

Tracking ROI is essential for PPC campaigns. When you neglect to do it, you starve yourself of valuable information that effectively communicates which PPC ads are working, and which aren’t.

Calculating PPC ROI is pretty simple, too. All you have to do is subtract the cost of a PPC advertisement from the profit it earned from clicks, then divide it by the cost again.

The equation looks like this:

Profit – Cost / Cost

To turn the result into a percentage, just multiply by 100.

That’s the manual way to do it … but these days, a lot of platforms will serve you the numbers automatically. Here are the most important ones to pay attention to:

  • Ad spend: The total amount of money spent on a campaign.
  • ROAS: This is what people usually mean when they talk about PPC ROI. It calculates revenue generated from every dollar spent on ads.
  • Conversion rate: The number of people who completed the form or action on the landing page you linked to the ad.
  • Cost per conversion: The total cost of an ad (over campaign time) divided by the number of conversions during that same period.

PPC and bid management isn’t rocket science, although it can certainly look like it from an outside perspective. That said, it’s no cakewalk, either. Thankfully, there are tons of resources (like this one, and like us!) to help you manage.

Good luck and happy bidding!