One of the single biggest factors behind underperforming PPC accounts is “compound bidding”.
Below is a list of different ways adjust bids in a Google Ads account:
• Time of Day
• Day of Week
• Household Income*
• Parental Status*
• Any RLSA Audience
*Currently in the US Only.
i.e. Whilst working on Client X you analyse performance over a statistically significant period and discover the following user categories perform best:
- Mobile searches
- Between 12pm and 6pm
- On Weekdays
- In New York
- Between 25 and 34
- Top 10% household income bracket
- Returning Users
If you decide to implement a +20% bid adjustment for each bidding group. Let’s also assume you’re bidding £5 for one of the top keywords in the account; performance could in fact decline, rather than improve.
The reason: Compound Bidding.
• Just taking into account 5 signals (Device, Time of Day/Week, Location, Gender & Age) a bid can suddenly become significantly higher.
• Your initial bid of £5, now has the potential on certain users to be turned into a bid of £12.44, more than double your original bid! - Let me explain.
• Your inital bid of £5 will be multipled by each of the bid adjustments you have in place.
• Even with the data you’ve reviewed, are you confident enough to bid more than double for anyone searching for one of your ads? Chances are that the answer is no.
• The reason for this is that, when analysing data in Google Ads and/or Analytics, this data is generalised across all users, across all devices, across all times of day etc.
• It’s likely that unless you’re Nike or any other advertiser with a plethora of customer data to analyse micro segments, you won’t have sufficient data to know how a very small, specific group of users perform.
• As such, when setting bid adjustments, minimise the impact of Compound Bidding by setting slightly lower adjustments than the data is telling you.
• Furthermore, I’d recommend actually bidding down across poorly performing segments rather than up on top performers. This should limit the volume of expensive clicks.
• You should see more-efficient bidding moving forward and an overall more stable Avg CPC resulting in more clicks for your media spend and, in the long term, more conversions.
TLDR: You're probably bidding too much across your PPC accounts due to compound bidding. Lower current bid adjustments or look to implement negative bid adjustments to pull back on underperforming areas, rather than push up on strongest areas.