Google Test for a new AdWords Tool: Bid Simulator

1. May 2009

2. Do you ever wonder … ?
… if I increase my Max CPC bid from $2 to
$3, how many more clicks can I expect to
get?
… what would be the new position of my
ad if I bid $3 instead?
… how much would the clicks costs?
… how can I bid more effectively?
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3. Bid Simulator: What are the advantages?
Adds transparency into Google’s auction process and enables
informed bidding decisions
Estimates the click, cost, impression, and average position data that your
ads would have received in the last seven days had you set different
keyword Max CPC bids. Enables you to compare the performance of
different bids and select the one that works best for you.
Simplifies bidding process
Reduces the amount of time spent doing trial and error experimenting with
various keyword Max CPC bids.
Enables calculation of incremental cost per click (ICC)
Enables you to take incremental cost per click into account by
communicating click cost information at different bid levels. More on what
ICC is and why it matters later.
Google Confidential and Proprietary

4. Bid Simulator | Can you use this?
• Are currently using
– Conversion optimizer
You can not use bid
– Budget optimizer
simulator if you:
– Position preference
– Ads scheduling (advanced or basic)
• Have campaigns that hit your budget
Note: If you are an Enhanced CPC beta participant, you will see the bid simulator
option but should not use it. If you use any of the above, bid simulator will not show up.
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5. Bid Simulator | How does it work?
Your quality score
Your competitors’ bids and their quality scores
We know Amount of traffic search network received last week
Probability of a click on your ad given its position
Google’s auction system
Which position your ad would have shown at for any bid
We The number of clicks you would have gotten at those
estimate positions
The cost of those clicks
Note: This is a simulation of last week's data. Next week's results could be very different due to
changes in search traffic or actions by other advertisers
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6. Bid Simulator | Keyword thresholds
In order to get simulations, your keywords must meet adequate traffic
thresholds
Keyword (in the last seven days) Feature simulates
Receives adequate traffic • Click, cost, impression, and average
position data
Receives lower traffic • Click and cost data
Receives hardly any traffic • No simulation data
. . or keyword was recently added
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7. Bid Simulator | Accessing the tool (step 1)
Accessible from the AdWords front-end. Sign into your
account, and you are ready to begin
Select as many keywords as you
want to see simulations for and
click on “Edit Keyword Settings”
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8. Bid Simulator | Accessing the tool (step 2)
• Click “bid simulator” under any keyword’s search bid
• You cannot choose keywords in bulk but must click the
bid simulator link individually for each keyword
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9. Bid Simulator | UI – Scenario 1
Scenario 1:
Your keyword receives adequate traffic: shows the estimates of clicks,
cost, impressions and average position for several bids
;
Approximate
hypothetical bid range:
Max (2 x current bid)
Min (0.5 x current bid)
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10. Bid Simulator | UI – Scenario 1 (close-up)
Scenario 1:
Your keyword receives adequate traffic: shows the estimates of clicks,
cost, impressions and average position for several bids
Date range of simulation
Current bid
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11. Bid Simulator | UI – Scenario 2
Scenario 2:
Your keyword receives lower traffic: shows the estimates of impressions
and average position
Date range of
simulation
Current bid
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12. Bid Simulator | UI – Scenario 3
There are no estimates for a keyword that does not meet any threshold.
either because the keyword was recently added or the bid is too low to
receive any impressions
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13. Bid Simulator | Practical example
… I’m the marketing manager at PowderSki.com and need to bid
more effectively in order to get promoted this year! What should I do?
Well . . . . I recall seeing an AdWords blog that described a
free feature that will give me the insight to make better bidding
decisions.
So, let's see what I can do here . . . Our most important
keywords (i.e. the ones that spend the most) get more than 30
clicks a week, so I should be able to see bids vs. click cost
data for them.
Let's look at [skis].
At our current bid of $1.00 we got 69 clicks for $32.20. What if I went up to a bid of $1.25. That would
mean 119 clicks for $68.10. Hmm is it worth it?
We make a profit of $50 per conversion and our conversion rate is 10%.
By increasing my bid to $1.25, I would be spending $35.90 more for 50 more clicks. I expect those 50
clicks to turn into 5 conversions (at our 10% conversion rate). And I expect those 5 conversions to bring
in $250 (since our average profit per conversion is $50).
Wow! Spending $35.90 to get $250 seems like a good deal. I should increase my bid to get those
profitable clicks.
Google Confidential and Proprietary 13

14. Bid Simulator | Things to note
When a new keyword is added or a campaign started, simulations are
generated once there is enough click or impression data
Bid simulator does not simulate conversions or predict future results
Data gets refreshed once a day
Simulations are for Google.com and search only
Bid changes do not hinder our ability to simulate
For broad match keywords, the # of impressions (and, therefore, clicks) can
change dramatically with each bid. Even for a KW with avg position 1.1,
increasing a bid could make a significant difference in volume
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15. Bid Simulator | Popular FAQs
• Bid simulator and the Traffic Estimator use different data
• The Traffic Estimator looks primarily at overall traffic patterns
How is bid simulator
different from Traffic • Bid simulator's results are specific to your campaign and keywords
Estimator? • Bid simulator is more accurate at predicting results for a particular
advertiser
• AW3.0
• AdWords Editor
Bid simulator is not • API
available on …
• .CSV downloads
• Bulk changes
How does it work for a
• This is not available for content. If a campaign has both search and
campaign opted into the
content, bid simulator will only show simulations for search
search and content
networks?
How does this compare to • This is not meant to replace 3rd party services for bid or campaign
3rd party bid management management, as they provide many services beyond bid estimates
tools • This feature should help 3rd party bid management companies to be
more effective in helping their customers
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16. Bid Simulator | Planned future features
Additional features • Simulation at ad group and campaign levels
• AdWords 3.0
• API
Compatibility with • Editor
• Conversion Optimizer
• Ads scheduling
• Budget-constrained advertisers
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17. Bidding Concept | Incremental cost per click (ICC)
Bid simulator enables you to calculate your incremental cost per
click. It’s important to understand this concept to utilize the feature
fully
ICC measures how much extra you need to pay for the extra clicks
when moving from a lower bid to a higher bid
Bid Clicks Cost CPC Change in cost Change in clicks ICC
3 31,200 $3,770 $0.12 $3,770 - $3,360 31,200 - 30,700 $410 / 500
= $410 = 500 = $0.82
2 30,700 $3,360 $0.11 $3,360 - $2,810 30,700 - 28,000 $550 / 2,700
= $550 = 2,700 = $0.20
1 28,000 $2,810 $0.10 --- --- ---
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18. Bidding Concept | How to use ICC
Keyword 1
Bid Clicks Cost CPC Change in cost Change in clicks ICC
3 31,200 $3,770 $0.12 $3,770 - $3,360 31,200 - 30,700 $410 / 500
= $410 = 500 = $0.82
2 30,700 $3,360 $0.11 $3,360 - $2,810 30,700 - 28,000 $550 / 2,700
= $550 = 2,700 = $0.20
Current bid 1 28,000 $2,810 $0.10 – – –
Keyword 2
Bid Clicks Cost CPC Change in cost Change in clicks ICC
C 21,545 $2,760 $0.13 $2,760 - $2,360 21,545 - 20,115 $400 / 1,430
= $400 = 1,430 = $0.28
B 20,115 $2,360 $0.12 $2,360 - $1,810 20,115 - 18,000 $550 / 2,115 =
= $550 = 2,115 $0.26
Current bid A 18,000 $1,810 $0.10 – – –
Scenarios: Which bid should I raise?
• I have extra $600 approximately – raise keyword 1's bid from 1 to 2 because
the ICC is lower than from A to B
• I have additional extra $1,000 (beyond the extra $600) approximately – raise
keyword 2's bid from A to C. Don't raise keyword 1's bid because the ICC is
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higher

19. Contacts and Resources
Contacts • AdWords help email
• FAQs:
Resources
http://adwords.google.com/support/bin/topic.py?topic=19567
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