Overview of Optimizing Bids and Budgets
Your budget and maximum bids are tools to help you control costs while you work to get the most profit from your ads. It's important to use performance data to determine where your advertising spend will make the most impact. Then, test and analyze how you divide your spend to find the strategy that best helps you achieve your advertising goals.
Your daily budget helps determine how often your ads can show throughout the day. If your daily budget is too low, your ad won't appear every time it is searched for. However, if a campaign is not limited by budget (does not consistently meet that budget), then changes to budget have no effect on campaign performance. A good budget strategy for budget limited campaigns can maximize your ad exposure and take advantage of the traffic available to you.
Your bids, on the other hand, help determine your ad position on the page and your profit margins. A good bidding strategy can help ensure your campaign is profitable and can impact your overall return on investment (ROI).
Here are some key things to know about optimizing bids and budgets.
Understand your ROI
When many advertisers invest money in an ad campaign, they typically expect to gain back that amount, and more, in profits. It's crucial that you understand what you can gain from your advertising spend. If you hope to make a profit, make sure that you take the time to analyze and track your bids and the return you receive. Note that it's your bids, and not budget, that directly impacts your ROI.
When many advertisers invest money in an ad campaign, they typically expect to gain back that amount, and more, in profits. It's crucial that you understand what you can gain from your advertising spend. If you hope to make a profit, make sure that you take the time to analyze and track your bids and the return you receive. Note that it's your bids, and not budget, that directly impacts your ROI.
Understand the relationship between cost and quality
Before you consider changing your bids and budgets, make sure you understand how a good Quality Score can enhance any spending strategy. The higher a keyword's Quality Score, the lower the price you pay for each click (called your actual cost-per-click) and the better its ad position. For ads and keywords that are not performing well, sometimes a quality-related change will have more impact than a spend-related change. Optimizing for quality will nearly always benefit your budget and bidding strategy, and it can also help reduce your costs in the process.
Before you consider changing your bids and budgets, make sure you understand how a good Quality Score can enhance any spending strategy. The higher a keyword's Quality Score, the lower the price you pay for each click (called your actual cost-per-click) and the better its ad position. For ads and keywords that are not performing well, sometimes a quality-related change will have more impact than a spend-related change. Optimizing for quality will nearly always benefit your budget and bidding strategy, and it can also help reduce your costs in the process.
Allocate your budget according to performance
An important aspect of budgeting is making sure you have appropriate budgets for each campaign. Try to prioritize your products or services and then match budgets to each campaign based on priority. If you'd like certain keywords to receive maximum traffic, make sure they're in campaigns whose daily spend isn't consistently reaching or exceeding its daily budget. If your campaign often meets its budget, there is a chance that only your more general or high-traffic keywords will trigger your ads, overshadowing keywords that might be more profitable. In this case, a new campaign can help set aside budget for those profitable keywords.
An important aspect of budgeting is making sure you have appropriate budgets for each campaign. Try to prioritize your products or services and then match budgets to each campaign based on priority. If you'd like certain keywords to receive maximum traffic, make sure they're in campaigns whose daily spend isn't consistently reaching or exceeding its daily budget. If your campaign often meets its budget, there is a chance that only your more general or high-traffic keywords will trigger your ads, overshadowing keywords that might be more profitable. In this case, a new campaign can help set aside budget for those profitable keywords.
Experiment to see what works
Test different bid amounts and budgets, and measure how effective the change is. Test bids for profitability and ROI, and test budgets for ad exposure. We recommend adjusting amounts in small increments to allow your keywords to accrue performance data with the new settings. Allow at least a few days between changes so you'll have enough performance data to make an informed evaluation. In addition, your daily costs, profits, and sales might rise and fall with regular fluctuations in search volume. Therefore, you'll want to re-evaluate these amounts regularly to make sure your campaigns are continually effective.
Test different bid amounts and budgets, and measure how effective the change is. Test bids for profitability and ROI, and test budgets for ad exposure. We recommend adjusting amounts in small increments to allow your keywords to accrue performance data with the new settings. Allow at least a few days between changes so you'll have enough performance data to make an informed evaluation. In addition, your daily costs, profits, and sales might rise and fall with regular fluctuations in search volume. Therefore, you'll want to re-evaluate these amounts regularly to make sure your campaigns are continually effective.
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