New AdWords "Budget Optimizer" Bidding

RonnieG · 11:42 AM

Is anyone using this recently added bidding option / feature? Supposedly, with this new bidding option activated, Google's algos try to constantly adjust and optimize your individual keyword bids to get the most clicks possible for your monthly budget. The drawbacks are that this option is not compatible with campaign scheduling, and while it is active, you are not allowed to edit/change any of the keyword bids manually. When activated, it saves your current keyword bids and scheduling options, so if you choose to go back to manual bids, you can, and can pick up where you left off.

One idea I had was to let the algos do their optimization of keyword bids for a few weeks, long enough to get a good history. Then if I choose to go back to manual bids, and campaign scheduling, print out the "optimized" keyword bids for each ad group before I do so. Wherever the algo optimized bid was performing as well or better for that keyword than my previous manual bid, meaning decent CTR and conversions and lower average CPC, I would update the old manual bid with the algo's bid. This could resolve a number of over-bidding situations that I know I have, but was reluctant to deal with in fear of losing CTR and conversions.

I am just starting to use it with one existing campaign. I have good long term and recent history on the campaign, and I am not changing any of the keywords, ad text or landing pages, so it should be interesting to see the long term (30 days) apples-to-apples results, as compared to the manual bid adjustments I was doing. It's obviously too soon to tell what the long term results will be. But for the first two days, average CPC is already down by almost 25% vs. last month's results. It looks like the algos are still making their adjustments as keywords get their first few hits from consumers, so I'll post updates on results here every week or so until the experiment is done.

JennSellsFast · 06-07-2007, 11:48 AM

Cool Ronnie, be sure to report to us your findings. I am an "old school" type of ppc advertiser. If this new way is worth it I will switch.

brandonre · 06-07-2007, 12:09 PM

Ronnie , Can you tell me where to find that bidding option I can't find it on my google adwords?

RonnieG · 12:45 PM

The option is in the Campaign settings, under "Advanced Options", "Keyword Bidding", then click the "View and edit bidding options" link.

Once selected, it is applied to every ad group and keyword in the campaign.

Borino · 06-13-2007, 11:38 AM

Interesting read:
Three AdWords Experts: Don’t Let Google Optimize Your Campaign
http://www.smallbusinesssem.com/2007...your-campaign/

RonnieG · 11:59 AM

Stats after 7 full days on "Bid Optimizer", as compared to the same ad groups in May on manual bidding:

Average CTR down from 5.75% to 2.56%. (possibly bad for QS)
Average ad positions down from 1.5 to 3.5 (bad? Maybe.)
Average CPC down by 25%, to .99 (very good)
Average conversion rate up from 4.82% to 5.83% (good)
Average cost per conversion (registration) down by 36% (very good)

I think these stats show, at least for our industry, that the supposed experts really don't know what they are talking about when they disparage automatic bid optimization. Before this experiment, I would have responded the same way they did, but only based on "gut feel".

I have also discovered that if you decide to revert to manual bidding, you have a choice of reverting to your keyword bids as they were prior to trying Bid Optimizer, or you may keep the latest Bid Optimizer bids, and move on from there. I'll give it another week or so, and if the bottom line results are still good, will probably keep Bid Optimizer's new keyword bids and make just a few manual adjustments from there.

My initial "gut feel": The AdWords Bid Optimizer appears to be a pretty good and easy way to get your initial keyword bids set to reasonably well performing numbers without a whole lot of time or effort. After that, you can further optimize by reverting to manual bids and tweaking some of the main keyword phrases that you really want to place well on, even if it means higher CPCs for those keywords, and higher cost per conversion. After all, we have a much greater potential sale value than most industries that use PPC, so our ROI should support it.

RonnieG · 12:25 PM

The blogs / forum discussion Borino refers to have nothing to do with the AdWords Bid Optimizer option being discussed here. Those posts refer to Google's offers to help develop additional keywords they think may help your campaign attract a broader audience. To the extent that the various responders address the issues with that process, I tend to agree. Cherry pick whatever you think may be appropriate and throw away the rest. On the other hand, the AdWords built-in Bid Optimizer attempts to optimize your existing keyword bids to yield lower CPC and therefore more total clicks for the budget and keywords you already have. These are two very different topics and approaches.

PS: One of the responders claims that higher CTR is always better. Before this experiment, I would have agreed. However, based on the results, it looks like being in a slightly lower (and less expensive) ad position may actually filter out some of the casual and abusive clicks that a top ad position might get, and you get more clicks from serious prospects. Food for thought.

mmuench · 06-13-2007, 03:34 PM

Thanks for posting your findings, Ron.

I have also been testing out the Budget Optimizer and got similar results to yours. While my CTR dropped, my Avg Cost Per Click did, too. I was worried about the effect the drop in CTR would have on my Quality Score until I realized "Hey, what does it matter of I have a low QS if I'm getting the same volume of clicks for less money anyway?" After all, that is the whole point for trying to increase your QS anyway, right?

For me it's a no-brainer -- I'm leaving it on.

Borino · 06-14-2007, 10:54 AM

You're right Ronnie, my post (and link) is not about the tool, on the other hand, it does deal with the same issue - and the reason I posted it here, which is handing over control (to an extend) of a PPC campaign to Google.

I've been running a test of the Budget Optimizer for the last 7 days on one of my smaller campaigns, and so far the results are not that impressive:

My CTR is down from 3.75% to 2.27% and total clicks are down 41%. Too soon of course to draw any conclusions, plus I'll need to factor in conversions in another 2-3 weeks.

And you maybe right on Ronnie, less traffic may not necessarily be a bad thing. We'll see...

RonnieG · 06-14-2007, 03:08 PM

Mike's (MMuench) and my real estate campaigns, ads and basic keywords are probably very similar, other than market areas, so similar results are not unexpected. However, as with any other tools and techniques, where you start out, and what your product and market is, will have a lot to do with whatever final results you get. I am also trying Budget Optimizer with two brand new non-real estate client campaigns. One for a mortgage loan lender, my first, and another I can't talk about. I am seeing OK but not great results with those. Because some of the keywords, at least in the second case, are very niche market, Google may not have enough keyword history to do as good a job as it did on the real estate stuff, so it may take a lot longer to stabilize. Also keep in mind that you probably need to start with a somewhat higher maximum keyword bid that really needed, and trust that Google will not significantly overbid, which is a lot of trust, believe me!

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