How much should you bid in Google Shopping?
This is one of the most important questions digital marketers face when managing any PPC campaign. Bid too low and your products won’t get chosen. Bid too high and you’ll waste money on irrelevant traffic that doesn’t convert.
Striking the right balance in bidding is essential to the success of your Google Shopping campaigns. Good Bid Management in Google Shopping is all about making Bid Adjustments – increasing and decreasing bids with a focus on optimizing performance.
In this post, we’ll show you how to adjust your bids to increase quality traffic and maximize ROAS.
Types of Bid Adjustments in Shopping
Before you start adjusting your bids, you need to make sure you have a firm understanding of your total Shopping budget. It’s no use increasing your bids if your budget isn’t large enough to support the extra spend, the increase in volume will just cap your budget early.
There are two basic bid settings offered by Google AdWords or Bing: manual bidding and automatic bidding – pretty self-explanatory. As it says on the tin, automatic bidding leaves the bidding in the hands of the network. We always recommend that you opt for manual bidding as the only real way to optimize your results is to have full control over the bidding system.
In addition to the basic automatic/manual choice, PPC ad networks offer a bunch of different options for adjusting your Shopping bids. These are called modifiers, and they can be used to increase or decrease your bids for different devices, locations, time of day and target groups. These modifiers can be super handy when used correctly, but beware that they are multiplicative if you use more than one, meaning you can end up with far higher CPCs than you intended.
Experimentation is key
The best way to optimize your Google Shopping bids is to start with a relatively low bid and then slowly increase it and see what happens. Initially, as you increase your bids from a low floor you will see traffic increase very quickly. As you push your bids higher, traffic will plateau and your cost per click will increase a lot with little return. The key is to stop bidding up just before you reach the plateau.
To find the warning signs of having reached the plateau, we experimented with increasing bids by $0.25 every day for each product group and monitored the impact on performance and on the search terms Google matched us against.
Initially impression share, impressions, and clicks rose in line with the bid increases. We then hit a point where impression share was no longer a reliable indicator of the additional traffic Google would drive. In fact, our impression share remained in the 80% to 90% range while impressions and clicks continued to rise along with our CPC. At this point, our Cost Of Sale also obviously increased.
This change was caused by us entering more and more auctions for short queries, for examples pure brand names. The pool of potential impressions was driven more by our bid than the specific product we set the bid on. Due to the query segmentation in place, we did not see a large rise in generic queries but this would be an added risk in non-segmented campaigns.
These tests helped us to confirm the S-curve in Shopping bidding, which looks like this:
As a general rule of thumb, if you increase the bid and the CR decreases and sales stay the same, your bid is too high. A decrease in CTR or a large difference between the bid and the average CPC can also be indications that searches with low relevance are being identified as suitable and that you should lower your bids. Finally, don’t make your bid changes too aggressively, as it almost always has a negative effect on performance.
Let a tool do the work for you
Managing all these bid changes manually isn’t complicated, but it is time-consuming (and never ending). SEA-Tools – such as Camato – can run these daily tasks for you. Today’s bid management algorithms will always push your account’s performance towards the optimum.
Camato will make bid suggestions according to the optimization goal you set – ROAS, Revenue, Profit or Customer Lifetime Value (CLV). You can even let Camato automatically set initial bids for new products you add to your feed.
It might sound like magic, but it’s actually done through a process called exponential smoothing. Our bid optimization algorithm uses your campaign performance from the last 30 days to automatically increase or decrease bids. It’s up to you how frequently bids are calculated – daily, twice a week, weekly.
Camato will bid up on the product groups that have a higher Revenue, Profit or CLV than the target you set and will bid down the ones with lower values than the target.
To avoid over-aggressive bids and bid changes, you can set limits on how much a bid can be increased by. For example, a maximum percentage bid change or a bid floor and ceiling. Our best practice is to set the maximum bid at three times the average CPC and the minimum bid at 20% of the average CPC.
Camato also calculates a device bid modifier for Desktop, Mobile and Tablet at both the ad group and campaign level. Set your bid modifiers for existing Remarketing Lists quickly and easily directly in the tool as well. All you must do is to set your goals and Camato manages the changes for you.
In addition to helping you to optimize your revenue, a good bid management strategy can help you manage your inventory.
For example, if you want to sell more of a specific product to shift the last of the summer stock or push something you have a surplus of, you can through a strategy called Yield Management.
All you need to do is apply a custom label to the products you want to sell directly in your Product Feed and set a percentage between -100% and +400% in Camato. When it comes time for Camato to calculate bids for those products, it will consider their past performance and apply the yield adjustment on that performance data.
The adjusted performance data signals to the bidding algorithm which direction you want to move the bid of this product, whether it is an increase or a decrease. Based on that signal and other performance factors, the algorithm will decide the best bid adjustment to that product to help you sell more (or less) of it.
Through a simple method of experimentation, you can find the optimal bids for your Google Shopping campaigns. Bid optimization requires patience – you need to make small changes and wait for the results – and a lot of time (unless you use Camato), but the results are well worth the effort.
For more on how Camato can help you optimize your bids, visit camato.io.
Article by Antje Lewerenz and Jing Xie