These slides were presented during the SEMrush webinar 'Advanced PPC #3: Create Your Own Automated Bid Strategies'. You can access the video and the transcript here >>> https://www.semrush.com/webinars/advanced-ppc-3-create-your-own-automated-bid-strategies/

1. Advanced PPC #3: Create
your own automated bid
strategies

2. Who am I?
● Booster Box
● Scientific performance marketing
● 6.5y at Google
● Google Online Marketing
● Advisor for Capital G (Alphabet)

3. Who am I?
● @ktzstyle
● gianluca@boosterboxdigital.com
● I will keep saying Google AdWords
for a while

4. Agenda
● Bidding on Google Search: recap
● What is a bidding model?
● How to set up the right bid
● Implementing your bidding model in 15 mins

5. Recap

6. How does bidding on Google Search work
● Second Level Price Auction
● You pay one cent more than the person behind you in the
auction
● All actors are incentivised to bid the max value of a click*
*Google runs second-price-auctions in order to decide what ads to display. It is possible to prove (check any introductory textbook on
game theory and/or auction the- ory for a reference) that - in this case - bidding exactly the value of the ob ject that is auctioned is the
optimal action plan (i.e., the Nash equilibrium strategy of the game).

7. Look up for “Hal Varian on YouTube”

8. What is a bidding model?

10. 1$ for 1000 KG of potatoes

11. 1$ for 1000 KG of potatoes

13. 1000$ for 1 potato

14. 1000$ for 1 potato

15. ● Valore di un click > Costo del
click -> aumenta
● Valore di un click < Costo del
click -> diminusci
La logica del bidding e’ semplice
#SMConnect - @ktzstyle
● Estimated click value > Click cost
-> bid more
● estimated click value < click cost
-> Bid less

16. ● Valore di un click > Costo del
click -> aumenta
● Valore di un click < Costo del
click -> diminusci
La logica del bidding e’ semplice
#SMConnect - @ktzstyle
● Estimated click value > Click cost
-> bid more
● estimated click value < click cost
-> Bid less

17. How to set up the right bid

18. What do we need?

19. Ingredients
● Granular Structure and AdGroup with proper match type
● Relevant Ads and LPs
● Complete tracking (including calls and micro-conversions)
● Proper attribution model

20. Ingredients
● No HIPPOs wanting to appear 1st on all KWs
HI.ghest
P.aid
P.erson
O.pinion

21. Assumptions

22. Conversion Rates Don't Vary Much with Ad Position
details

23. Not everyone agrees

24. “higher positions increase both the click-through and
conversion rates. When advertisements are served in
higher positions, approximately one-third of new
conversions is due to increased click-through while
approximately two-thirds are due to increased
conversion rates.”
Oliver J. Rutz, Randolph E. Bucklin, Garrett P. Sonnier (2012) A Latent Instrumental Variables Approach to Modeling
Keyword Conversion in Paid Search Advertising. Journal of Marketing Research: June 2012, Vol. 49, No. 3, pp.
306-319. (dettagli)

25. “conversion rates across all sixteen
ad positions we investigated follow
a relatively stable distribution, with
the exception of the first two ads.”
Liu, Z., Jansen, B. J. and Simon, Z. (2011), Investigating the effect of results ranking in sponsored search. Proc. Am.
Soc. Info. Sci. Tech., 48: 1–10. doi:10.1002/meet.2011.14504801071 (dettagli)

26. “Click-to-conversion rates for
keywords generally fall according to
rank. However, conversion rates for
low volume keywords may actually
increase at lower ranks.”
The Atlas Rank Report—Part II: How Search Engine Rank Impacts Conversions By Nico Brooks, Director of Research and
Development—Atlas OnePoint

27. “Decent bidding rank not only has
positive influence on online
retailers’ click rates and conversion
rates, but also improves customer’s
reservation price.”
International Journal of Economics, Commerce and Management United Kingdom Vol. V, Issue 9, September 2017 Licensed under Creative Common
Page 1 http://ijecm.co.uk/ ISSN 2348 0386 JOINT OPTIMIZATION STRATEGY FOR BIDDING AND PRICING OF ONLINE FASHION RETAILER UNDER
BIDDING RANKING,Xu Qi & Fei Kai dettagli

28. Why is it so difficult to measure?
Avg Position = f (Quality Score)
Quality Score = f (User Experience)
User Experience = f (Conversion Rates)
Avg Position = f (Conversion Rates)

29. Why is it so difficult to measure?
We can only see average values (most granular level
is hourly based on one single day)

30. Conversion Rates Don't Vary Much with Ad Position
details

31. ● Valore di un click > Costo del
click -> aumenta
● Valore di un click < Costo del
click -> diminusci
La logica del bidding e’ semplice
#SMConnect - @ktzstyle
● Estimated click value > Click cost
-> bid more
● estimated click value < click cost
-> Bid less

32. Derive Value per Click from CPA
● CPA = Cost / Conversions
● where Costs = Clicks * CPC
● and Conversions = Clicks * CR
● We can simplify CPA = (Clicks / CPC) / (CR * Clicks)
● Therefore CPA = CPC / CR
● If we solve for CPC we have CPC (Value per Click) = CPA * CR

33. Derive Value per Click from ROAS
● ROAS = Revenue / Costs
● where Revenue = AOV * Clicks * CR
● and Costs = Clicks * CPC
● We can simplify ROAS = AOV * Clicks * CR / Clicks * CPC therefore
ROAS = AOV * CR / CPC
● If we solve for CPC we have CPC (Value per Click) = AOV * CR / ROAS
● We also know that ROAS = 1 / Margin , we can simplify in CPC = AOV *
Margin * CR

34. What do we need to calculate the Value
per Click?
#1 Ingredient: understand the value of what we sell
a) In a CPA Model = Target CPA
b) In a ROAS Model = Margin * AOV
#2 Ingredient: establish the likelihood that a click will sell a
product
Conversion Rates

35. What do we need to calculate the Value
per Click?
#1 Ingredient: understand the value of what we sell
a) In a CPA Model = Target CPA
b) In a ROAS Model = Margin * AOV
#2 Ingredient: establish the likelihood that a click will sell a
product
Conversion Rates
EASY

36. What do we need to calculate the Value
per Click?
#1 Ingredient: understand the value of what we sell
a) In a CPA Model = Target CPA
b) In a ROAS Model = Margin * AOV
#2 Ingredient: establish the likelihood that a click will sell a
product
Conversion Rates
EASY
Wait a
second

37. How do we define conversion rate?
Define the correct conversions windows

40. Define a minimum threshold
● We need at least X Clicks in the last Y days to estimate the
Conversion Rate of a keyword:
○ For keywords that do meet the threshold we have enough
data to estimate the value per click
○ For keywords that do not meet the threshold we need to
estimate

41. How to measure conversion rates
Guess where you have limited data

42. How to measure conversion rates
● Guess when you only have limited data
○ Extend Time Range
○ Cluster
■ Semantic
■ Campaign type (Brand, Non Brand)
■ High Intent
■ Word Count
■ ...

44. What about segments?
● Remarketing list
● Demo
● Time Device
● Location

45. What about segments?
● Remarketing list
● Demo
● Time Device
● Location
Use bid adjustments

46. Example

47. Example
CR Mobile 2.55% / CR Desktop 5.33% = 47%
mobile
desktop
tablet

48. Implementation

49. 3 steps
● Data Collection
● Compute Bids
● Upload Bids

50. Data Collection
1) Connect a Sheet with Google Ads
a) You can use a software like Supermetrics, Funnel.io...
b) You can use Google Ads Add-On
c) You can use this script from Frederick Vallaeys to
populate the sheet

51. Data Collection
2) Import the following columns (if you are using Supermetrics)
Ecommerce
["Clicks","Conversionsmanyperclick","ROAS","Totalconversionvalue","CPC"]
last7days, last30days, last60days, last90days
Lead Gen
["Clicks","Conversionsmanyperclick","CPC"]
last7days, last30days, last60days, last90days

52. Compute Bids
In a separate tab decide how much you want to bid

53. Upload
your
final Bid
Here is a script from Russel Savage

54. Final Checklist
1) Define Target CPA and Target Roas
2) Define min threshold
3) Collect data
4) Compute Bids:
a) For keywords above threshold measure Value per Click
b) For keywords below threshold aggregate then measure
Value per Click
5) Upload your Bids

55. ● 3 Advanced Tips For Bid Adjustments In Google Enhanced
Campaigns (Search Engine Land) here
● The Definitive Framework for Bidding in AdWords - Hero Conf
London 2016 (Wijnand Meijer) here
● Hero conference 2016 - advanced bidding (Chris Haleua) here
● The complete AdWords Audit Part 13: Bid Management (Brad
Geddes) here
Want to know more?