How to optimize PPC bid management at the keyword level

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There are two tactics you could use for daily PPC bid management at the  keyword level. You could bulk-edit keyword bids using desktop applications like AdWords Editor  (for Google) or Microsoft AdCenter Desktop (for Bing and Yahoo) . Alternatively,  you can change single keywords one by one. Both of these tactics have pros and cons. The bulk management saves you time, but the single changes are always more precise and you can’t miss an important keyword.

1. Bulk bid management:

For the sake of convenience let’s assume that we use Google AdWords (for Mictrosoft everything is the same but the names of the tools and some terminology).  For the bulk keyword management I use following tactics. In AdWords Editor I first download the statistics from the day after the last bid changes (usually 1-2 days before) till present. Then I sort the keywords by average position. Then I group the keywords in three groups: Keywords with Average position greater than or equal to 6, keywords with average position between 3.1 and 6, and keywords with average position of 2.9 and below.

The first group’s bids I increase (using “Advanced bid changes”) with some amount of currency – and not percentage – that I determine considering the  ceiling of the keywords Maximum CPC. Note that you should always have in mind a ceiling/upper limit of your keywords Maximum CPC. That way you will ensure that your daily budget won’t be exhausted just by few expensive clicks. I choose a ceiling between 10-20% of the daily campaign budget, depending on factors like the budget itself, the nature of the industry or webpage I promote, or – sometimes – client’s recommendations.

The second keyword group’s bids I increase again considering this max CPC ceiling, and the increase should be lower than the first group’s increase. For the third keyword group I lower the bids with some value that should be between the increasing amounts.

Example: Bids for keywords with average position >=6 are increased with 20% of your max CPC ceiling; average position <6 and >=3.1 – increased with 10%; and average position <3 – decreased with 15% of the ceiling.

After that operation I may download the campaigns “All Time” statistics in AdWords Editor and, using Advanced Bid Changes, to “raise the keyword maximum CPCs to their first page bid estimates”. Always set the bids no higher than the ceiling you consider best. However I often doubt the Google’s First page bid estimates. They seem unrealistic considering the average positions of many keywords, but that is another topic.

2. Bid Management of keywords one by one:

As mentioned above, the most precise bid management is done for every keyword separately. To do that you don’t need the Desktop AdWords Editor – it’s most comfortably done in the online AdWords interface. You can sort the keywords there by Clicks or Impressions, or Conversions. Then you can look at your best keywords and change their bids considering their Average positions. Here you should also have in mind a Max. CPC ceiling/upper limit mentioned above.

You can choose one of these tactics or a combination of both, depending on following things:

1. Daily budget of the campaigns you manage.

If your monthly budget is too low, you have little room for increasing or decreasing the bids, so you don’t need to waste time for single keywords if you have just a few cents to spare for them. In that case use bulk edit. Here it is most important to lower the bids for the keywords with good average positions (below 2.9) and by that to free some budget for more valuable keywords.

2. Number of Keywords:

If you have thousands of keywords that receive clicks, it is not possible to change their bids one by one on a daily basis. However, you can use the second optimization tactics only for select groups of keywords. Separately you can bulk-edit the bids with the first tactics.

3. Worktime:

If you have enough time to spare, it is always good to use both tactics. But if you don’t – well, the Bulk edit brings good results in roughly 10-15 minutes of management per day. It’s also worth noting that time for both kinds of bid management may depend on your network connection speed.

These optimization tactics will help you achieve an average keyword position of 3, which I think is normally the optimal position that will ensure best visibility for your ads at lowest price. The more frequently you manage keyword CPC bids, the better results you’ll have. Have in mind though, that it is good to change bids no more than once per day or two, because you need to use the average position data after your last bid changes. Otherwise, you risk overbidding or letting your average positions remain too high.