Setting the bids for each keyword correctly is one secret to success on AdWords. Bid too much per keyword, and you’re wasting money. Bid too little, and you don’t get enough impressions. Bid exactly the right amount per keyword, and conversions go up and cost costs go down. So how do you know how much to bid for a keyword?
People think that they can try to estimate how much to bid for a keyword, because the keyword is tied to a product or service. Here’s the problem: A customer could search for Product A, get to your site, and end up purchasing Product B.
How does Finch translate keywords to products? We don’t! We just figure out how much revenue each keyword is responsible for and adjust the Max CPCs accordingly.
You can calculate your Max CPC for a single keyword:
- Track the revenue that this single keyword generates over a time period. For example, $10,000 a month.
- Looking at the conversion rate of that single keyword during the time period. For example, 2%.
- Decide the amount you’re willing to pay for the conversion. For example, 10% of revenue.
- Take the amount you’re willing to pay and multiply it by the conversion rate. $1000 * .02 = $20.
So the maximum CPC for this keyword would be $20.
If you have just a few keywords, then you may be able to compute correct bid amounts without a problem. Or you could arrive at the correct bid after some trial and error. If you have one keyword and one product then this is easy enough. However, if you’re like most clients, you probably have hundreds or thousands of keywords and products. We have some clients with hundreds of thousands of keywords.
Let’s pretend that you ran the numbers and have arrived at the correct bid amounts. Guess what? Since we’re tracking revenue for a time period, then we’re looking at a rolling average. By the time you get your bids entered into AdWords it’s time to start again. Finch computes bid amounts for all your keywords daily to adjust for changes in market conditions, seasonality, and trends. Mind blowing, isn’t it?
Don’t force your brain to explode. Don’t hire a team of expensive, full-time analytical statisticians. Don’t trust that your ad agency is taking care of it. Finch is the only company who sets CPCs dynamically based on the value of the keyword. While your competition is bidding by CPC and CPA, you’ll be ahead of them bidding on the same clicks but with more data powering your decisions. Get started with Finch today so we can prove that we’re different.