en
English Español Deutsch Français Italiano Português (Brasil) Русский 中文 日本語
Submit post
Go to Blog

Weekly Wisdom with Joel Bondorowsky: How to Set Bids in Google Ads

Weekly Wisdom with Joel Bondorowsky: How to Set Bids in Google Ads

Joel Bondorowsky

Modified Transcript

Hello everyone watching. Thank you all for watching my third weekly wisdom video. I am Joel Bondorowsky, Founder and Executive Director of PPC Designs. I am also SEMrush’s PPC academy professor. For this week’s weekly wisdom video, I am going to show you how to set bidding with Google Ads.

Why is bidding so important? Because when you are doing PPC advertising, you are empowered by being able to choose the maximum amount that you would like to pay per click for any given keyword. But, in order to do pay per click bidding, you need to know what that amount is; this is something that is mysterious to people, especially when they are getting into Google Ads, but really the formula is quite simple.

The formula is basically one that lets you know what the value for each one of those clicks is. After all, to be profitable with a pay per click campaign, you need to pay less per click than the value that those clicks bring. So understanding the value per click, or VPC, is the essential component in understanding the amount you want to set as your max CPC bids with Google ads. So let's Begin.

Starting With Gathering Keywords in Your Account

The first thing you are going to do is log into your Google Ads account; once you are in your Google Ads account you are going to download a report — a keyword report that gives you the data you will need to determine what those max CPC bids are. There are two ways to extract this report; one is from the reporting section of Google Ads, and the second is by viewing a keyword list in the keyword view in Google Ads and clicking on the download icon.

Both methods will effectively download your keywords with the stats you need to download bids. For the purpose of this demonstration, I will walk you through this through the reporting section. The reporting section has a few advantages. The main one being that you can save the settings for your report so that you can easily download the report on a regular basis. You can even choose to have it run on a schedule so that you don’t have to log in and manually download it.

This option is important because bidding is something that you are going to want to do on a regular basis. You are going to want to regularly download these keyword reports.

Run these formulas that I am going to lay out for you.

Also, adjust bids on words that are profitable so that you are making more off of them and lower bids on keywords that are losing you money.

  • Once you log into Google ads, click on reporting.

  • Click on Custom.

  • Set the conditions for the report.

    • Example: Choose the time range for the report.

  • Filter just relevant campaigns.

  • Add dimensions and metrics for the reports.

  • Drag dimensions over to reporting section:

    • Campaign name

    • Ad group name

    • Search keyword

    • Match type

    • Search keyword status

After we add our dimensions, we will want to drag over our metrics.The metrics that we are going to want to choose are.

  • Impressions

  • Clicks

  • Cost

  • Conversions

Next click download as CSV.As I have mentioned before, it is sometimes a good idea to schedule these reports so that they are run on a regular basis. You can also save them so that you can easily access the same report whenever you would like to run it.

Now that you have extracted the data from Google, go ahead and open your Excel spreadsheet.

Important Tips for Excel Spreadsheets

Next, save the excel file as an XLSX file. Select the keywords column, and find and replace equal signs to blanks. This is necessary if you have broad modifier keywords that start with a + symbol. When you open them up in Excel, it can think its a formula and try to equal them to something so we can get around this by finding and replacing them as I just outlined.

Now we will want to clean up the report a little bit by removing or hiding some of the columns that aren’t relevant for this task that we’re performing.

We will start by removing the top two rows that show the date range and name of the report. Next, we can go ahead and delete the currency column; we don’t need to be seeing that the report is in dollars over and over again. In the example in the video, we are setting bids on keywords that are run over multiple campaigns and ad groups. To drown out more noise, let’s go ahead and hide those columns.

Now that we are done we can go ahead and look at what we have.

At this point, it’s a bit overwhelming. If you scroll down a bit, you’ll see that you have a keyword list that has over 3600 words. When you are glancing at it, you really can’t deduce or understand a thing about it.

I’m going to give you a tip right now, a very important tip.

Whenever you’re looking at a report such as a long keyword report, a placement report, or any type of report, and you want to make sense of it; the best thing to do is to sort by top spenders down.

So I will go ahead and do that. Since we want to see the most significant spenders first, let’s go ahead and select the column for cost and sort it from top to bottom.

Next, we will start our calculation for bids. You may have heard me explain this in the past. There are really two values needed to determine the value of a keyword — that is the keywords conversion rate and the value of the conversion itself.

I will repeat that.The conversion rate represents the percentage of clicks that produce sales. The value of the sales that those clicks bring. I think it is pretty simple to see that if you multiply the two, you then have the value per click.

Let’s say that the value of a sale is $100 and half of the people that went to your site purchased, the value of one person is $50. It is as simple as that. Now let’s say that 1% of the people convert, which is a much more reasonable conversion rate when the value of a sale is $100. When that happens, you multiply your 1% against $100, and you have a value of $1 per click. That means you can pay $1 per click for a specific keyword and break even. Obviously breaking even is not our goal with any advertising effort, but in order to
get there; we need to first understand the value of the clicks that we are buying traffic
with and our PPC campaigns.

Calculating Conversion Rate

Let's calculate our conversion right — labeled as CVR. The formula to calculate the conversion rate is quite simple, take the numbers of conversions and divide them by the number of clicks. Which I will enter in cell I, and then drag it all down by double clicking on the bottom right corner of the cell. Now we want to present all the numbers as percentages; select the column and click the percentage symbol. After we want to move the decimal spot over 2 spaces.

Now we are ready to calculate the VPC or value per click. We will go ahead and do this in column J using that very simple formula that I explained before. Now, in this example that I am giving right here the value
of one conversion is $50. So in cell J to apply this formula for value per click, which is the value of the conversion, $50 multiplied by the conversion rate. And we will drag it down again as we did with the conversion rate formula by double-clicking on the bottom right-hand side of that cell. Since this value is in dollars, let's go ahead and select these cells and click on the dollar sign at the formatting of such and wow, there you have it.

Now that you have this data, don't think you are done!

The value per click for this entire list of 3,600 keywords is determined. We can go ahead and set them as our max CPC bids and ad words. Actually really not quite. I am sorry, I wish it was that simple, but no, it is really, really, really, really way more complicated than this. Why? Because this formula only works to give you the value per click of each one of these keywords if you have confidence in the numbers.

So let's go ahead and look at this report of it differently so that I can explain this to you a bit better. Let's now
sort from top to bottom on the "clicks" column. And I am going to give you some news that might look a little bad. The bad news that I am going to tell you is that we really don't have any confidence in conversion rates for any of the keywords after about the 30th or so in the list. The reason is that any of the keywords below 30 really don't have significant statistics, which allow us to accurately calculate their conversion rates in order to accurately determine their value per click.

Flukes & Convergence

If there is a statistical fluke on any of the keywords at the top of the list, which would give one of those keywords may be one or two more or fewer conversions, the conversion rate would more or less be the same. Like for example, if there is a keyword with 500 clicks and 50 conversions and you give it 52 conversions; the conversion rate is going to be very close to what you will as if it was 50. However, if you were to add or take away one or two conversions for one of the keywords after these 30, that extra rate too would make a big difference.

So if one or two extra or fewer convergences can make a big difference in the performance of a word, you don't have dependable data to determine a conversion rate in order to give you a bid that you can trust. Well, this sounds awful, doesn't it? I promise you that you could control your campaigns. You can make them profitable by understanding your value per click and setting effective bids.

It is really not that bad, and I will tell you why. So I will go ahead and select the spend of the first 30 keywords in the list and see something that actually makes things start looking a little bit better. The value of those first 30 words is $30,233.40. However, some of the spend of all 3,600 and so keywords is almost $54,000; this means that 31 keywords comprises 56% of the spend of over 3,600 words. That is right; 31 keyword,s that is about .8% of the keywords in this account is spending 56% of the total. Well, now it is becoming a little bit better. I mean, I am starting to realize that I can at least have control over 56% of the spend that's already getting
some.

Sum Up the Conversions

And now to make the situation look even better, we can sum up the conversions of those first 30 keywords and compare them to the sum of that entire column as we did with the spend. And we will find that those first 30 words are responsible for 64% of the conversions in the entire account. This means that they are performing with a better cost per acquisition than the overall average for those 3,600 words. They are bringing in a sale at $47 while the rest of the account, while the whole account is doing it at $53.

As I said earlier, the value per conversion for this account is $50. So if we want these campaigns to be profitable, we can't be spending $53 per acquisition. So a very simple way to turn this account into a Google Ads money making machine without digging in too hard into statistical analysis and coming up with complex formulas in order to figure out how to give the best bid possible for that long list of more than 3,600 words that we don't have significant stats on, is to simply focus on that first 30 keywords which are giving us a positive return on investment.

And either cut out completely the rest or drastically lower their bid, so that way their spend is within check and they are also bringing us as a whole, a positive ROI. So a very simple way to turn this accounts into a Google Ads money making machine without digging into difficult statistical analysis on those 3,600 and so low stats keywords, is to simply focus on the 30 words that you can easily set accurate bids with that very simple formula I laid out. And either drastically cut bids as a whole on the words that you don't have stats on so that way immediately they stop becoming a drain in your account. Or if you want to be even more drastic, you can just cut those keywords out completely.

Just pause them, stop spending on them. Once you are able to get good performance with the main set of words that are very dependable, they are very manageable 30 words; you can start to introduce those other words back into the account. They will start to get statistics. You will be able to start bidding on them and in an effective manner so that they are also contributing to this beautiful Google Ads moneymaking machine
that is turning a profit for your business week in and week out.

So that is it for my Weekly Wisdom video for this week. Thank you for watching. Join me the next time, and we will revisit this report and show you how to deep dive into it further to have a better set bids,
optimize a bit better for profit, and also optimize the traffic you are driving with your campaign. This is all to enhance your PPC performance to get the most out of your Google Ads efforts and dollars.

Joel's Other Weekly Wisdom Videos

Joel Bondorowsky
Superstar

Knows everything… well, almost.

Joel Bondorowsky can be described as a true PPC addict. The last thing he does before bed is check his stats, which is also the first thing he does after waking up. It is his love for the job that feeds this addiction. He dabbled with his first small campaigns back in 2000, when PPC was at its infancy. However, it wasn’t until 2010, when he started working at Wix.com, when he got into more extreme PPC. After leaving Wix, Joel started a boutique ad agency called Quality Score where he managed some of the largest PPC campaigns in history. Today, he serves as the SEMrush Academy PPC professor s well as founder of PPCDesigns, a new boutique agency providing tailor made marketing solutions for large, mass market activities.
Share this post
or

Comments

2000
Helper

An experienced member who is always happy to help.

Nice video but I want to know that how can I set first-time bids on Keywords when start shopping campaign in Ads with automatic bidding?
Marcus Knight
Newcomer

Either just recently joined or is too shy to say something.

Cool video - I really like the VPC approach (if only it was as simple as the first half of the video!!). I'd be interested to hear your thoughts on how well Google's various bid strategies can replace the method you've outlined here? I have some accounts that I can confidently leave the bid strategies in charge and others where I can't move away from manual CPC!
Jyoti Thapa
Expert

Provides valuable insights and adds depth to the conversation.

A very important post, much needed for a successful ad campaign. Great tips and thank you for sharing such valuable content.
Newcomer

Either just recently joined or is too shy to say something.

Jyoti Thapa
welcome dear its not only the goal but it a how to helps people to communicate each other,😊😊
Newcomer

Either just recently joined or is too shy to say something.

helpful to smaller creator thank you
Navah Hopkins
Expert

Provides valuable insights and adds depth to the conversation.

Great piece! I'm completely with you on keeping accounts "small" and forcing queries to prove they are worthy of budget. One thing a lot of folks with large accounts forget is not every keyword will get a chance at budget. Sometimes it's better to let auction price guide you (especially if your most valuable keyword concepts got lost in gigantic account structures.
Joel Bondorowsky
Superstar

Knows everything… well, almost.

Navah Hopkins
That's right! If you're not conerting as well as you should be you can limit impression share by capping budget. Or, you can limit impression share by cutting out targeting that doesn't convert as well. That can be low converting keywords, demographics, geo's, time periods, to name a few. The point is that "small" is often more. And by more, I mean higher conversion rates and more stats to work with.
Uzair Kharawala
Master

A veteran community member.

Thanks Joel, great video and tips. 80/20 or 90/10 is the way to work with keywords. Keep a close eye on your best converters.
Joel Bondorowsky
Superstar

Knows everything… well, almost.

Uzair Kharawala
don't forget, other dimensions such as time and geo's can also be your best converters. Keep an eye on them too!
Marcus Wincott
Enthusiast

Occasionally takes part in conversations.

I think this is a really nice technique...

A lot of businesses using Google Ads spend a lot of time creating a complicated account structure in order to segment activity and budget quite granularly in line with their product or service offering and while this is a good approach, it can make monitoring performance at keyword level an arduous and daunting task.

Taking the time to set up a keyword report like this and then automating that report to generate on a regular basis is a fantastic way of managing bids in a time-efficient way but with a firm focus on the core metrics of value per click (VPC) and return on advertising spend (ROAS) per individual keyword.

Using this process not only allows you to reduce wastage across your account and spend your budget more efficiently, but also lets you identify and separate top performing keywords so you can spend some time exploring variations, experimenting with different matching types or focusing on positional improvements and outranking competitors.
Newcomer

Either just recently joined or is too shy to say something.

Great videos. I would put some thought on the point of 30 out of 3600 keywords counting for 64% conversions. Is that obvious there is a high possibility of hundreds to thousand redundant, less-to-no effective keywords?! And they are eating about 65% budget. I prefer U-shaped model on optimizing by putting 40% effort to top performing keywords (as your awesome guide) and 40% effort to costly-but-ineffective keywords. To do so, I believe we should have an additional step of seperating the keyword list.
Thank you very much for your sharing :)
Nguyễn Hồng Minh
Newcomer

Either just recently joined or is too shy to say something.

bài viết rất hay!
Joel Bondorowsky
Superstar

Knows everything… well, almost.

Nguyễn Hồng Minh
cảm ơn bạn. :-)
Deepak Shukla
Guru

A bearer of digital marketing wisdom.

Love this stuff.

I find one of the things that isn't always appropriately qualified is the prospects IV (initial value) as well as LTV and then factored against cost of acquisition (which can entirely ruin our models ofc)

And typically biz owners don't often know their LTV and pull pie in the sky figures

Love your walkthrough though buddy!
Joel Bondorowsky
Superstar

Knows everything… well, almost.

Deepak Shukla
Lifetime value should be considered when determining the value of a conversion. Often times, lifetime value isn't a sum of all of the money that a customer brings as it is sometimes wise to give a lower value to money that takes more time to come in.
Arnout Hellemans
Helper

An experienced member who is always happy to help.

I like the way you describe the value per conversion, and are looking for the most impact.

I have a few questions though; how do you handle keyword cannibalization; for instance a +keyword bidding on a [keyword] or on another +keyword2. Wouldn't it be wiser to check the search terms report on these data and then make sure you get the right keywords to bid on [exact match] and exclude them in the broad campaigns.

If you are changing bids Google Ads will try and spend all of it, in my experience at least. This might lead to the wrong keywords+ ads being shown.

All in all i would do this kind of exercise on search terms (and look at the matched keyword) first and first build the right account structure before changing bids especially on modified broad keywords.
What are your thoughts on this Joel?
Joel Bondorowsky
Superstar

Knows everything… well, almost.

Arnout Hellemans
Hi Arnot,

Keyword cannibalization isn't an issue when the more targeted word has a higher bid. If you want to bid less on it, you'll have to move it to another ad group.

Google does not charge you more because you change bids. The most you will pay for a click is one cent higher than the amount needed to have an equal ad rank to the competitor ad that you'd be ranking above.

Working with exacts is more simple, as you know what you're getting from it. However, in practice it will only work with the search terms that have a significant amount of traffic. Thus broad modifier and phrase match words help to aggregate other terms. Also broad modifier keywords are much more targeted when they compose of more words. Say, for example, you're advertising a website builder. A keyword like, '+create +website' leaves room for a lot of junk while '+create +own +free +website' is pretty targeted.
Arnout Hellemans
Helper

An experienced member who is always happy to help.

Joel Bondorowsky
I have found it to be different, especially if you are bidding for single modified broad terms. And even if you bid higher the other one might be matched due to a higher quality score (better expected ctr / better landing page experience / better ad relevancy. Hence my point to look at search terms and then work from there.
Joel Bondorowsky
Superstar

Knows everything… well, almost.

Arnout Hellemans
Your keywords are only profitable if the value they bring is higher than the cost you pay. Google puts you in control by letting you choose the max you pay per click for each keyword, on the keyword level. If a single search term's CVR varies greatly then the rest of the terms for that keyword, it is a good idea to make it its own keyword so that it gets its own bid.
Newcomer

Either just recently joined or is too shy to say something.

Arnout Hellemans
i think we should go for testing with low budget to find out negative and irrelevant keyword that make traffic but not sale and then add only keyword that gain leads.
Esteban Martinez
Enthusiast

Occasionally takes part in conversations.

Great video and vlog article Joel. I really enjoyed the step-by-step guide and detail in your process.

Although there some things that I would highlight from this;

The bidding guide doesn't support businesses which have different order values, such as ecommerce or B2B businesses. This make is difficult to establish the true Value Per Click (VPC).

There are several different bidding models within Google Ads, which will perform different from;
Target CPA
Target ROI
Maximise Clicks
Maximise Conversions
Manual CPC
Plus more

It is important to companies to understand how this operate and when to select these bidding models.

For new accounts I suggest using manual bidding first, to establish a baseline to work from before switch to another bidding strategy.

I covered this in detail on my YouTube video below.

https://www.youtube.com/watch?v=ypJ-txmmllE

Thanks again and I look forward to your next video 

Esteban
Addicted 2 PPC
Joel Bondorowsky
Superstar

Knows everything… well, almost.

Esteban Martinez
Hi Esteban,

You are correct in the fact that the method I presented works when you have one consistent order value. However, you can overcome this by including the average order value for each keyword in an additional column in the report, and using it for the calculation. Once your account complies a good amount of conversion history, switching to one form of automated bidding is recommended. In the case of an ecommerce site, that would be ROAS.
Pavel Naydenov
Helper

An experienced member who is always happy to help.

Nice talk Joel.

One question here.
What do you think about the automated bidding strategies such as Targeted CPA, Maximize for conversions, etc.?

Cheers.
Joel Bondorowsky
Superstar

Knows everything… well, almost.

Pavel Naydenov
Conversion optimizer, in its many forms, can be more effective than manual bidding. A big reason for this is due to the fact that it adjusts for many dimensions that you aren't even able to see. However, for it to work, Google needs to have significant conversion history, with recent history performing close to your goal. Manual bidding is necessary in order to be in control to get to where you can hand the keys over to Google, and let it do your bidding for you.
Pavel Naydenov
Helper

An experienced member who is always happy to help.

Joel Bondorowsky
Definitely agree.
Two weeks ago I experienced such a small crash.

I set automated bidding strategy to a campaign that wasn't active for the last 6 months.

It was a disaster - Budget wise. I almost had a mini stroke when I saw 9$ per/click for a keyword that can cost 2.5$
:-)

Lesson learned.
Cheers.
Joel Bondorowsky
Superstar

Knows everything… well, almost.

Pavel Naydenov
If you anticipate a fluctuation in performance, it could often be best to pause campaigns. This could happen from holidays or technical matters, such as web server upgrades.
Newcomer

Either just recently joined or is too shy to say something.

Great info, how would bidding this way impact on avg position and impression share. Couldn't it impact the VPC in a negative way if you increase bids and drove more traffic from less relevant search terms in BMM or Phrase match keywords.
Joel Bondorowsky
Superstar

Knows everything… well, almost.

Joel Griffiths
With this method, you will lower bids on keywords that are underperforming, including if it is due to the keywords bringing in less relevant terms. Lowering bids can cause these words to lose position, thus impression she. However, it will also cause you to stop losing money from these keywords.

If a keyword brings in search terms that are not relevant, you can see this in a search term report. Then you could add them as keywords with appropriate bids, based on their conversion rates, or exclude them all together. Likewise, if you see a term that has a high conversion rate, you may want to add it as its own keyword so that you can give it a higher bid without having to bid higher on the rest of the terms from the keyword.
Newcomer

Either just recently joined or is too shy to say something.

Eager to apply your recommendations on my campaigns, thanks once again Joel!

Meantime, Can you please share a content related to "how to track multiple affiliate links like Amazon or eBay using GTM and the goal conversion thru GA"
Craig Campbell
Helper

An experienced member who is always happy to help.

Great info yet again Joel, love the tip for the spreadsheets not many people are giving away exactly how they are doing PPC or how they are going about the spreadsheet and the formulas you are using in the background. Keep up the good work man :D
Joel Bondorowsky
Superstar

Knows everything… well, almost.

Craig Campbell
Craig, thanks for the feedback. I believe in freely giving out information. Not just because it helps people, but more good things will come back to me than whatever I may lose.

Send feedback

Your feedback must contain at least 3 words (10 characters).

We will only use this email to respond to you on your feedback. Privacy Policy

Thank you for your feedback!