How Do I Optimize Budgeting and Bidding in Google AdWords? [Basic Edition]
Feel lost when you hear CPC Google AdWords? How about CPM bidding? Or Max. CPC?
If you’re new to Google AdWords, or if you’re a busy person taking care of tons of other aspects of your small business, the budgeting and bidding process can seem a bit overwhelming. It doesn’t need to be.
Here’s a few basics you need to know to get the ROI for your Google ad dollars.
What are these letters? PPC/CPC, CPM, and CPA explained
Ok, I’ll start by giving you information that will make you sound smart.
You may not need to use all these acronyms and terms, but it will give you more clarity about the basic bidding options you have on Google. The rest of this article will focus on the one you’ll most likely use: PPC/ CPC.
Here’s PPC/CPC, CPM and CPA explained:
PPC/ CPC (pay-per-click/ cost-per-click) is what most small business marketers use. Your cost is based on the number of clicks on your ad. You can choose manual or automatic bidding (which I’ll talk about soon). CPC is the default costing you see when you make your ad.
CPM (cost-per-impression) is best for branding. You pay based on every one thousand views - not the actions taken. This option is only available if you are advertising in the Google AdWords Network only. _Note: If you don’t even know what the Google Network is yet, I’d highly recommend you start with the PPC option.
CPA (cost-per-acquisition) is a more advanced bidding process. It requires you to have conversion tracking, and has a number of other criteria you must meet. You cost out your ads based on what you are willing to pay for a specified ad conversion._ For example, if your ad’s destination URL links to a product page on your ecommerce site, or an email-gated landing page, Google tracks the conversions on your pages. You are charged based on each acquisition._
Note, there is also:
CPV (cost-per-view) - this is for video ads only.
ECPC (enhanced cost-per-click) - this is an advanced option that requires conversion tracking. It enables Google to more strategically go after your target market, and optimize your ROI.
Google AdWords PPC: Essential Basics
Okay, so let’s get into more detail about the bid process you’re most likely to use.
Cost-Per-Click (CPC) is the standard method of budgeting your Google AdWords. It gives you great ROI, because you only pay when someone is interested enough to take the action of clicking on your ad.
If you’re familiar with advertising on a more traditional medium, like print, TV or radio, the whole concept of only paying for results may seem strange. With a CPC budget, you know that people are clicking through to your website, landing pages, or social sites. If you don’t get click throughs, you don’t pay.
If you’ve never advertised online, you’ll also need to get used to budgeting on a daily basis. This is pretty simple to calculate. Just take your weekly, monthly or quarterly ad budget, and do the math to get your daily budget.
For a first time Google AdWords campaign, I’d suggest starting in the $20 - $50/ day range. You can change your budget at any time. Monitor your ads. If you’re getting great results - increase your ad spend.
PPC Automatic vs. Manual Bidding Explained
With the PPC option, you can choose automatic or manual bidding. This is kind of like choosing to drive either an automatic or a stick shift car.
I’d suggest you choose automatic if you’re new, or really have no time to play around with your ads strategically. When you gain familiarity try out my preferred method - manual bidding which gives you tons more freedom in adjusting your performance.
Here’s a bit more info on the two types:
Automatic bidding means you let Google determine your CPC for each keyword you’re using in your ad campaigns.
When you are setting up your new ad campaign, in the Budget section:
- Select “AdWords will set up my bids to help maximize clicks within my target budget” for your Bid strategy
- Set your Budget as the amount you are willing to spend per day
When you’re starting out - or you have a million other business tasks to focus on - automatic bidding is the simplest way to bid your costs. Google optimizes your campaigns to give you the most clicks for your budget.
Manual bidding means you get to choose your Maximum CPC for each keyword. Manual bidding gives you the flexibility to fine-tune your ad targeting for your business needs.
To technically make a manual bid CPC ad:
- Choose “I’ll manually set my bids for clicks” in the Bid strategy
- Set your Default bid - this is your Maximum CPC (the maximum you’ll pay for ads in an ad group)
- Set your Budget as the amount you are willing to spend per day
The benefits of manual bidding is that you can control which keywords you want to spend more of your budget on. This means you can get a lot more strategic in your advertising ROI and business objective targets.
For example, if you’re advertising for a coffee shop and they want to focus on “lattes” this week, you can adjust your Max. CPC to spend more per your “latte” related keywords for that week.
Additionally, costs of bids change throughout the day based on volume of bidding. It’s an auction that’s based on supply and demand (kind of like the stock market - but not quite as complex). So, if you get more advanced, and your strategic bidding is bringing your business great ROI, you can try out more specific tactics - like using bid adjustments and optimizing your bids throughout the day.
How to Increase your AdWords ROI: 3 Tactics
There’s many methods to improve your results with Google AdWords. In fact, there’s been hundreds of books written about it, and entire careers dedicated solely to increasing AdWord ROI.
Now, you’re likely not interested in spending all your days outsmarting the pros. Here’s three simple tactics you can use, that will let you get back to running your business - and drive traffic from your ads.
Here’s 3 basic tactics to increase your ROI:
1. Improve your keyword Quality Score: Google rates every keyword phrase you choose for your ads. The higher your score, the better your ads will perform, and the lower your cost-per-click.
2. Monitor your performance and optimize your bids: Always check your metrics throughout your ad campaigns. Track your ROI, and determine what is getting you the best results for the lowest cost. For example, if you are active in real estate marketing, you might find that tweaking your keywords or changing your landing page lowers your cost-per-click and increases conversions.
3. Adjust your keyword bids: Monitor your results. Increase your Max. CPC on keywords that are getting you results. Decrease your Max. CPC on keywords that don’t.
Budgeting, bidding and increasing your ROI with Google AdWords doesn’t have to be a mystery. Hopefully this article has helped to shed clarity and confidence in your future AdWords campaigns.
To read more about Google AdWords:
- Why Does My Small Business Need Google AdWords?
- 10 Google AdWords Mistakes You Need to Avoid: Beginners Guide
- Google AdWords: 25 Glossary Terms You Need to Know
- 10 Questions: How to Plan a Successful Google AdWords Campaign