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Basic Formula for Managing Bids

Can anyone point me to a post to get started?



8:17 pm on Aug 9, 2008 (gmt 0)

10+ Year Member

So I've taken the advice to overbid initially and when a keyword becomes inactive I bid at 10c above the minimum CPC.

My next tactic has been to decrease the bid to 1c above the CPC when I get a clickthrough.

But this is just me guessing. I know one should factor in CTR and position but I don't know what the 'basic formula' is (if there is one).

Can anybody direct me to a post with some tips about this?



8:14 pm on Sep 11, 2008 (gmt 0)

10+ Year Member

P.S. The campaign I'm managing only gets up to 5 CTs per day (fairly expensive Real Estate KWs) so I'm not looking for bid management software.


8:23 pm on Sep 11, 2008 (gmt 0)

WebmasterWorld Administrator buckworks is a WebmasterWorld Top Contributor of All Time 10+ Year Member

The most important thing you need to know is how much is the average visitor worth in new profits once they land on your site. As long as your average cost per click comes in under that number, your campaign will pay for itself and leave something to put in your pocket.

Example: if 1% of your traffic buys something, and your profit margin on the average purchase was $30, you'd break even at 30 cents per click. If you can get well-targeted clicks cheaper than that, you'll start to make money.

The most important thing to know about CTR is what you can do to improve it, because improving your CTR will make your ad more competitive without raising your per-click costs.

Test different versions of ads, give careful thought to negative keywords, and pause or delete ads or terms that are not performing well. Watch your site stats for keywords that convert unusually well. You can afford to bid more on those hidden gems.


8:54 pm on Sep 11, 2008 (gmt 0)

10+ Year Member

With Real Estate I think it would be pretty hard to decide what a CT is worth because it could be that only one lead per 3 months would actually turn into a sale and it would be worth it if the Realtor spent $300 or $2000 but the Realtor would obviously rather spend $300 and if I can get the same number of targeted CTS for $300 then it is worth it for the Realtor to pay me to do this.

In this case the Realtor wants to spend only $5/day and the budget is used up before the end of the day so I am trying to minimise the CPC in order to maximise the number of CTs she gets before her budget is used up.

I'm having good results with optimizing ad copy and refining ad groups and the CTRs are still going up. I have been bidding down and maintaining the same position. I just don't know how much I can bid down. I'm just guesssing.

This is why I'm hoping to find some kind of basic guideline for lowering bids such as:

'When I get a CT, if the CTR is over 1.5% and the position is OK then bid down to 11 cents above the CPC'.

Or maybe I don't need to bid down? Will the CPC get lower just by increasing the CTR?



9:35 am on Sep 12, 2008 (gmt 0)

5+ Year Member

in order to answer you in a way i felt appropriate, i made alot of assumptions (sorry)

with something like real estate you want the max exposure locally at a reasonable cpc
$5 a day appears to be a bit too little to have the appropriate level of exposure

make sure the campaign is set to show evenly over time
not as quickly as possible

because of the geotargeted nature of GOOD campaigns for real estate agents
search partners should be turned off
(sometimes the geotargeting dosent work so well for partners)
and content network probably isnt appropriate

a 1.5%ctr is very low for this type of campaign

campaigns for real estate agents should be targeted to the repective city
and should have the city name included with each keyword (broad match)

the way geotargeting works someone searching from outside the city but with the name in there query will still see the advertisement

make sure you use appropriate negatives on a campaign level like


it would be great however to have a way of tracking conversions
like a lead form on the respective website (integrated with adwords coversion tracking preferably)
or one of those cool click to call services

cpc will get lower all things being equal if ctr increases

dont worry about reducing your bid so much but i would suggest you set your bids so they show in an average position between 3-4
do not use position preferances
just set it once and leave it

sometimes having a local phone number in the ads will increase either calls or ctr (there is no downside)
its important to test this
works best in position 4, 3, 2, 1 on the right

because of the limited budget it makes it even more important that you use [google.com...] to test (not regular search)

local seo can be very effective for real estate agents
that may be a better solution for this advertiser in addition or instead of adwords

are you a web designer?


6:46 pm on Sep 12, 2008 (gmt 0)

WebmasterWorld Senior Member netmeg is a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month

Make sure you're in Google Local Business as well.


8:50 pm on Sep 12, 2008 (gmt 0)

10+ Year Member

Hi Cyberandroid,

That is a lot of food for thought - thanks. I have suggested the Realtor ups her budget but she doesn't respond - I know her slightly as she was my ex's realtor for a while and I know she doesn't bother with things when she is already making enough money so I have let that go.

Hawaii is a bit unusual in that the majority of new buyers are from the mainland, particularly California. I haven't looked into the geotargeting aspect but I obviously need to.

Actually the CTR of the campaign is going up every week and was at 2.68 for the last 7 days.

No, I'm not a web designer although I have created a few optimized websites for local vacation rentals using an html editor and a bit of basic html knowledge. Amateur but they have done their job in getting people booked up!

Thanks again for throwing all that out there - makes me realise I've got a lot to learn.



10:47 pm on Sep 12, 2008 (gmt 0)

10+ Year Member

I'm going to ask my question in another way to try and understand how this works:

I have a maximum CPC of $1.10 for a KW and I get a clickthrough at 85c (average position 6.9, CTR 2.94%). If I raise the bid am I going to get higher positioning? (I think I have maximized ad copy optimization and ad groups are narrowly defined).

From what I understand now, 'Bid Management' is not about bidding down as your CTR & Quality Score goes up but more about increasing bids to achieve the desired position and maximise conversions.

Is this correct?


10:53 pm on Sep 12, 2008 (gmt 0)

10+ Year Member

Cyberandroid, can you tell me why Search Partners should be turned off?


12:15 am on Sep 13, 2008 (gmt 0)

5+ Year Member

im talking to netmeg

from my perspective its better to either run only google local bussines ads or regular ads
and if you do run both it must be in seperate campaigns

local bussines ads only show properly on google maps if search partners is on unfortunately

plus inherently localbussines ads or more correctly map ads are double targeted wich is 1 more variable

the advantage to running map ads is when they are in the top left
and show as an expandable listing with a map but when they are in this position there cpc is about 1.5* what a text ad would be in the same place (its worth it though)

however they are a disadvantage on the right side because they have the top line locked to the name and it cant be tweaked
and they compete with regular ads

$5 a day is not enough to even set up a good map ad campaign
local seo is a better invesment and will not require constant investment

in my opinion the priority should be
local seo
adwords map ads

netmeg im not in the mood to explain why search partners should be turned off besides the poor reporting, bad geotargeting, fake search engines, generally poorer conv rate and respective tiny budget

maybe you can explain this better
or maybe someone else like smallcompany will chime in


12:44 am on Sep 13, 2008 (gmt 0)

5+ Year Member

position 7 is no good for you
if you cant get around 4 then use position preferance with a minimum of position 9 and a max of 9
dont change your bids your cpc will still decrease by probably 50%

this will put you on the top of the second page

how are you being compensated for your services namniboose?

its hard to manage $150 on 150 clicks so dont worry about it
set up the campaign as well as possible and dont worry about 'bid management'

for you i ThinK the best positions from best to worst
are 4-3-1-2-9-5-6-8-7-10+


2:55 am on Sep 13, 2008 (gmt 0)

10+ Year Member

Hi Cyberandroid,

Most of the keywords that get CTs are in position 3-4 but occasionally I get one from positions lower down the page.

What do you mean 'manage $150 on 150 clicks...'?

This is my first client so I didn't charge much ($200) even though it's been hours and hours of work - I see this as my 'learning campaign' and I am fortunate to have a client who is so 'hands off'. So even if my efforts to fine tune her campaign are not going to make much difference to her, I want to learn how to do it optimally for other Realtors who are hungrier for clients and willing to spend more.

A friend suggested that charging a monthly fee to maintain the campaign would be easier for people to swallow than a big chunk upfront. I bet there are lots of threads about this but I am wondering if I can justify it if I don't need to do much on a regular basis.



12:17 pm on Sep 13, 2008 (gmt 0)

5+ Year Member

$5 a day for about 5 clicks
$150 for 150

i actually have a friend who is a real estate agent
i think i will hook him up
for a campaign like that it should only take a few hours for setup

PPC Consultant

3:35 am on Sep 17, 2008 (gmt 0)

5+ Year Member

I am glad you do not like position 7. That is where I am most profitable - so please keep off of it :)


3:22 am on Sep 18, 2008 (gmt 0)

5+ Year Member

real estate?!?!
he has no real conversion tracking at best it was a shot in the dark
your most profitable at the bottom of page 1 advertising in the real estate vertical PPC Consultant

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