A guide to Bidding on Google Adwords

By Eric Driegen

Sep 17
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Google Adwords has made it easier than ever to have your brand, your service and your products shown to millions of potential customers. Adwords makes it very simple to setup a new campaign, add your keywords and write your ads. But is it really as easy as Google tries to make it seem? The truth is, no it’s not. It’s a very complicated system that if not used properly could waste a lot of your marketing budget on irrelevant clicks.

Before we get too deep into how to maximize your budget, let’s have a quick review of how Adwords works and how Google ranks your ads and spends your money. The first thing you will need to do is to setup your campaign. Within the campaign you will have adgroups and in the adgroups is where you will be choosing keywords and writing ads. All of the ads that you write have something called an Ad Rank. Ad Rank is what Google uses to choose what ad is on the first page and what ad is on the second page. In order to get your ad on the first page you have to optimize the follow aspects of your campaign.

Bid: Are you spending enough money to reach that 1st page position?

Quality: Is your ad, landing page and target keywords relevant to the search query?

All of these aspects must come together to increase your ad rank get you onto the first page. In this blog I am going to focus mainly on bidding and I will do another blog on raising your quality score.

Google Adwords is the world’s largest auction. This means that every time your ad is shown to a potential client, you have “outbid” your competition for that position. Once that user clicks on your ad you will be charged the maximum bid that the competition below you bid, plus $0.01. For example, if all things are equal (e.g. your ad rank is the same) and you and your competition are bidding for the 1st position on the first page and your competition has a maximum bid of $5.00 and you have a maximum bid of $10.00, Google will give you the top position and charge you $5.01 for the click. That cost is what we call Cost per Click or CPC.

Cost Per Click or CPC is one of the more popular way of bidding. Paying every time your ad is clicked. But there are many different ways of bidding depending on your goals.

Cost per Click – Paying for every click on your ad. Ideal for getting traffic to your website.

Cost per 1000 impressions (CPM) – pay every time your ad is show to users. This is ideal for branding

Enhanced CPC – Google varies your bid on the likelihood of a conversion. Ideal for focusing on ROI.

Those are the basic bid strategies. But there are quite a few other options as well.

Along with these options of bidding, you can also choose to have Google automatically bid for you, or take a more manual approach. If you take the manual approach you can maximize your profit by balancing CPA (Cost per Acquisition) and number of conversions. You can also allocate more budget to higher performing campaigns.

We highly suggest that if you are not familiar with how Adwords works that you choose an automated CPC approach. Or hire a company like ours that have the experience with manual bidding and will be able to maximize those budgets.