Every PPC marketer claims to be optimizing accounts and campaigns, but as Bryan Minor pointed out in the last Pay vs. Bid post, A Case for Automated Optimization, without bid history, which unfortunately is hidden in AdWords and other PPC publishers, it’s impossible to manually optimize accounts.
If we’re all on the same page about the importance of PPC automation, the next step is to understand that automated optimization, in and of itself, does not solve all bid and pay issues.
With the rise in mobile advertising, understanding the relation between bid and pay for different devices (mobile and non-mobile) can help you generate more impressions, clicks and conversions from PPC initiatives for both mobile and non-mobile devices.
Here is a look at what most advertisers are doing wrong when it comes to mobile and non-mobile bids and payments and what Acquisio’s Chief Scientist, Bryan Minor, says is the only way to effectively optimize what is paid on separate devices.
Mobile Campaign Adjustment
As more traffic gets shifted to mobile, most advertisers are more than likely bidding for mobile incorrectly.
With optimization tools like AdWords’ Conversion Optimizer, CPC (what is paid) is specified for a whole campaign, including mobile and all other devices. To set separate bids for mobile, a mobile bid modifier or adjuster must be used, which enables campaign managers to set a percentage difference for ads on mobile devices. Advertisers modify the mobile bid using percentage adjustments, for example setting a difference of 20% for mobile.
The majority of advertisers misunderstand that adjusting the bid for mobile by a % does not adjust the pay by the same amount. A 20% adjustment to the bid does not mean a 20% adjustment to the pay, or CPC. This is because of the way pay is determined using bids and quality score and other factors Google takes into account.
Marketers cannot directly decide what to pay per click or per conversion for an ad. They can only decide what their maximum bid will be. Pay is decided by Google and determined by the quality score multiplied by the bid (along with other Google-determined factors). Websites with low quality scores will need to bid higher in order to pay the same amount of money as someone with a better quality score.
In general, there is no direct or simple relationship between the bid and what is paid, and although advertisers may not be able to understand the way bids are converted into pay, automated optimization solutions can.
Here is the most important takeaway from this post: Without knowing the true value of mobile campaigns in comparison to other non-mobile devices, advertisers should pay the same amount for clicks on both mobile and desktop devices. So when an advertiser talks about optimizing for both mobile and non-mobile devices, this should mean there is a strategy in place that works to equalize what is paid for the two device types.
In AdWords, CPC, or the pay, is averaged between devices. If desktop clicks cost $2.00 and mobile cost $1.00, the analytics will say that the CPC was $1.50. For advertisers who want to pay $1.50 for clicks, this seems perfectly fine. The problem is, the company is paying too much for desktop and too little for mobile. If the pay was actually $1.50 for each device type, the campaign would reach more people and the advertiser would see more clicks and conversions for the same cost.
Normally, marketers should pay the same for mobile and desktop clicks because leads from one are indistinguishable from the other in common dashboards. It makes no sense to pay more than something is worth, so balancing pay is generally the best way to ensure campaigns are reaching the widest, most relevant audience possible.
How to Balance Pay
Mobile and non-mobile devices are part of completely separate auctions. A bid of $3.00 in both auctions could result in a pay of $1.24 for mobile and $2.37 for non-mobile devices. With identical bids, advertisers pay a lot more for one device than the other in almost every case.
The solution, to balance pay between device types, is to set different bids. Acquisio’s automated optimization tool, Bid & Budget Management (BBM) uses its advanced algorithms to figure out what to bid to make the pay equal for both mobile and non-mobile devices.
AdWords’s Conversion Optimizer does not offer any option to optimize this way.
With Acquisio’s BBM tool, each bid is a test and with bid adjustments every half hour, the algorithms continuously adapt bids in order to set the pay at whatever amount the system determines will drive the most traffic (within the restricted campaign budget). That pay value, when optimized, should be identical for both mobile and desktop devices.
Here is an example of the Bid and Pay issue for a mobile case:
Since there is a Mobile bid modifier present:
The actual Bid being used is: Bid = $0.20 * 0.90 = $0.18
And the pay is: Pay = $0.11
This is a significant difference over nearly 18K clicks this month.
BBM’s algorithms constantly steer towards the goal – equal pay for mobile and desktop.
Higher Value Devices
In some cases, advertisers actually know what one device campaign is worth, meaning from analysis of their advertising efforts on mobile and non-mobile, they were able to deduce that one device brings in more leads and is of higher value to their account. That’s a different scenario.
If an advertiser knows, from business logic, that mobile is worth twice as much as non-mobile devices, then paying more for mobile is a better way to optimize. But to be clear, this does not simply mean bidding more for mobile.
Learning the difference between bid and pay, and using optimization tools to either balance pay across devices or target pay differently depending on which device is more valuable is essential to reach more people and maximize the campaign budget to get more conversions.
The key takeaway for advertisers using optimization tools is that pay matters, and setting bids differently for each auction is necessary to reach the ideal pay target.