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Gianluca Binelli — Advanced PPC: Create Your Own Automated Bid Strategies

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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/

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Gianluca Binelli — Advanced PPC: Create Your Own Automated Bid Strategies

  1. 1. Advanced PPC #3: Create your own automated bid strategies
  2. 2. Who am I? ● Booster Box ● Scientific performance marketing ● 6.5y at Google ● Google Online Marketing ● Advisor for Capital G (Alphabet)
  3. 3. Who am I? ● @ktzstyle ● gianluca@boosterboxdigital.com ● I will keep saying Google AdWords for a while
  4. 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. 5. Recap
  6. 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. 7. Look up for “Hal Varian on YouTube”
  8. 8. What is a bidding model?
  9. 9. 1$ for 1000 KG of potatoes
  10. 10. 1$ for 1000 KG of potatoes
  11. 11. 1000$ for 1 potato
  12. 12. 1000$ for 1 potato
  13. 13. ● 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
  14. 14. ● 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
  15. 15. How to set up the right bid
  16. 16. What do we need?
  17. 17. Ingredients ● Granular Structure and AdGroup with proper match type ● Relevant Ads and LPs ● Complete tracking (including calls and micro-conversions) ● Proper attribution model
  18. 18. Ingredients ● No HIPPOs wanting to appear 1st on all KWs HI.ghest P.aid P.erson O.pinion
  19. 19. Assumptions
  20. 20. Conversion Rates Don't Vary Much with Ad Position details
  21. 21. Not everyone agrees
  22. 22. “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)
  23. 23. “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)
  24. 24. “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
  25. 25. “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
  26. 26. 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)
  27. 27. Why is it so difficult to measure? We can only see average values (most granular level is hourly based on one single day)
  28. 28. Conversion Rates Don't Vary Much with Ad Position details
  29. 29. ● 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
  30. 30. 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
  31. 31. 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
  32. 32. 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
  33. 33. 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
  34. 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 EASY Wait a second
  35. 35. How do we define conversion rate? Define the correct conversions windows
  36. 36. 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
  37. 37. How to measure conversion rates Guess where you have limited data
  38. 38. 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 ■ ...
  39. 39. What about segments? ● Remarketing list ● Demo ● Time Device ● Location
  40. 40. What about segments? ● Remarketing list ● Demo ● Time Device ● Location Use bid adjustments
  41. 41. Example
  42. 42. Example CR Mobile 2.55% / CR Desktop 5.33% = 47% mobile desktop tablet
  43. 43. Implementation
  44. 44. 3 steps ● Data Collection ● Compute Bids ● Upload Bids
  45. 45. 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
  46. 46. 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
  47. 47. Compute Bids In a separate tab decide how much you want to bid
  48. 48. Upload your final Bid Here is a script from Russel Savage
  49. 49. 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
  50. 50. ● 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?

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