• Budget-based bidding vs. position-based bidding
• Optimize your bid on the ad group level
• Control your budget with the Account Daily Spending Limit

Budget-based bidding vs. position-based bidding

While it can be tempting to study the search results and try to bid to specific positions in the listings, this is not generally the most effective way to achieve profitable sales. Bidding this way might even put you into a bidding war with your competitors. Furthermore, margins and marketing budgets are not the same for each advertiser.

Instead, we suggest budget-based bidding. Your goal should be to allocate your budget to the ads that deliver the most profitable sales for your business.

The following key metrics are required to calculate the most effective bid per keyword or ad group:

1. Maximum marketing budget per sale
2. Maximum impressions (how often your ad is displayed in a search result) for keyword or ad group (based on the information in your account or the Find Keywords wizard)
3. Average click-through rate (3.5% could be used as a standard in case no historical data is available from testing)
4. Conversion rate (number of sales divided by the number of visitors to your site).

To decrease the time required to manage your account, we suggest setting bid at the ad group level. Managing bids at the keyword level requires a significant amount of time and may not necessarily lead to the most profitable results.

Optimize your bid at the ad group level

When creating a new ad group or managing your account at the ad group level, you will be able to define your bid for an ad group. When doing this, you may want to take advantage of our helpful tool that calculates estimated average clicks for your proposed bid. The tool also provides you with information on the estimated average position of your ads and share of available impressions.¹

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Control your budget with the Account Daily Spending Limit

If you would like to set budget limits independent of your bid, you have the option to set an Account Daily Spending Limit. By using this feature, you simply cap the budget on a daily basis and your estimated monthly spend limit will be automatically smoothed over a period of 30 days.²

This feature benefits you by:

• Helping to ensure you do not exceed your monthly maximum budget.
• Helping to make sure you do not go offline too early in the month, which can happen if your keywords get a lot of traffic and generate a high amount of click costs.

Learn more about the Account Daily Spending Limit.

¹The numbers are calculated using your bids and historical data. Please remember that this is an estimate only and not a guarantee of click volume.

²Your daily spend caps are targets only. You may see fluctuations in your actual daily click charges due to changes in search volume, but your total monthly click charges should be close to your target monthly budget (target monthly budget is calculated as 30 times your daily spend cap, for a rolling 30 days).