How PPC Bidding Works
When creating a Pay-Per-Click (PPC) campaign, you’ll soon learn that not only do you need to find and optimise your target keywords but you’ll also need to set up a bidding strategy.
Bidding refers to how advertisers compete for the placement of their ads on a search engine’s results page or on other social media platforms.
PPC is an online advertising model where advertisers pay a fee each time their ad is clicked and how you bid for these clicks determines the success and cost of your campaign.
Here’s how the bidding process generally works:
- Auction System: PPC advertising platforms, such as Google Ads or Facebook Ads, use an auction system to determine which ads appear on a search results page or other relevant places on the internet.
- Bid Amount: Advertisers specify the maximum amount they are willing to pay for a click on their ad. This is known as the bid amount. The bid amount is essentially the maximum cost-per-click (CPC) that an advertiser is willing to pay.
- Ad Rank: In addition to the bid amount, the ad platform also considers the ad’s relevance and the expected click-through rate. The combination of these factors determines the ad rank.
- Ad Rank = Bid Amount × Quality Score
- Quality Score is a metric used by platforms like Google Ads to measure the relevance and quality of an ad in relation to the user’s search query.
- Ad Placement: Ads are then ranked based on their ad rank, and the highest-ranked ads are displayed in the most prominent positions on the search results page or other ad spaces.
- Cost: Advertisers are charged based on the actual cost of a click, which is often less than their maximum bid amount. The cost is influenced not only by the bid amount but also by the ad rank of competitors.
- Ad Rotation: In some cases, advertisers can set preferences for how their ads rotate or are displayed, such as evenly rotating them or favouring the ad with the highest historical performance.
Bidding in PPC is a volatile process, and adjusting your bid strategies based on performance, competition, and campaign goals is critical. It’s a crucial aspect of PPC management, as effective bidding can help achieve higher ad placements and maximise the return on investment (ROI) for your advertising spend.
How Ad Rank Affects Ad Price
Ad Rank is a special score that decides the fate of your ad. It looks at two things: how much money you’re willing to spend (your bid amount) and how good and relevant your ad is (Quality Score).
Bid Amount: Think of bid amount as the maximum money you’re willing to pay for someone to click on your ad. Adverts with a lower ad rank may have to pay more per click.
Quality Score: Quality Score is like a report card for your ad. It checks if your ad is interesting, relevant, and if the webpage people land on is useful. It’s not just about spending money; it’s about providing a good experience for people who click.
Ad Rank = Bid Amount × Quality Score: Now, Ad Rank is like a combined score, adding up your bid amount and your Quality Score. It’s not just about spending a lot of money; it’s about spending money wisely on a good ad.
Better Ads Cheaper Clicks:
This Ad Rank decides where your ad will show up. The higher your Ad Rank, the better the spot for your ad on the search results page. It’s like being at the front of the line.
Ad Rank not only decides where your ad shows up but also how much you pay. Surprisingly, you might not have to pay your full bid amount. The cost is often less than your bid amount, it’s determined by how well your ad ranks against others.
To make Ad Rank work in your favour, it’s like finding the right balance. Don’t just spend a lot; make sure your ad is good and relevant. Adjust your strategy regularly to get the best results. If you’re spending lots per click it could be due to a poor ad rank.
How Much Will PPC Campaign Cost
Understanding the cost of a Pay-Per-Click (PPC) campaign is important to anyone who wants to run one. Managing the cost requires careful planning, monitoring, and optimisation. Let’s break down the cost aspects in a simpler way.
Determining PPC Campaign Cost:
- Bidding Amount: The heart of PPC cost lies in your bid amount – how much you’re willing to pay for a click on your ad. It’s like setting the price tag for each visitor to your website.
- Ad Rank Influence: The Ad Rank, which combines your bid amount and Quality Score, plays a role in determining not just your ad’s position but also the actual cost per click. If your ad has a high Ad Rank, you might end up paying less than your maximum bid.
- Campaign Length: The duration of your PPC campaign also factors into the overall cost. Running ads for an extended period naturally accumulates more costs. It’s akin to deciding how long your project will last and budgeting accordingly.
Example Scenarios:
- Low Bidding, Low Competition: If you bid conservatively and there’s minimal competition, you may end up paying a lower cost per click. Think of it like opting for a cost-effective service when there’s less demand.
- High Bidding, High Competition: On the flip side, a high bid in a competitive landscape may result in a higher cost per click. It’s comparable to choosing a premium service when there’s fierce competition for attention.
Calculating Campaign Cost:
The total cost of your PPC campaign can be calculated using a straightforward formula:
Total Cost = Cost Per Click × Number of Clicks
So, if your cost per click is £1, and you get 100 clicks, the total cost would be £100.
Optimising for Cost:
- Regular Monitoring: Keep a close eye on your campaign performance. If you notice high costs without satisfactory results, it might be time to adjust your strategy.
- Refine Keywords: Choose relevant keywords wisely. If your keywords are too broad, you might attract clicks that don’t convert. This is akin to refining your project goals for better focus.
- Quality Score Enhancement: Boost your Quality Score by creating high-quality, relevant ads. This can improve your Ad Rank, potentially reducing your cost per click.
- Budget Allocation: Allocate your budget strategically across campaigns and ad groups. Distributing your resources wisely is like ensuring different parts of your project get adequate attention.
- Experiment with Bidding Strategies: Try different bidding strategies based on your campaign goals. This experimentation is akin to testing various approaches in your project to see what works best.
Understanding the cost dynamics of a PPC campaign involves finding the right balance between bidding, duration, and optimisation strategies. It’s like managing a project budget – careful planning and adaptability are keys to achieving your goals cost-effectively.
How to Create & Manage your Bidding Strategy
Choosing a bidding strategy for your PPC campaign is a bit like deciding how to play your cards in a game. It’s not just about the money; it’s about being strategic and knowing when to switch things up. Let’s explore this in simpler terms.
Picking a Bidding Strategy:
When it comes to bidding, there are a few strategies to consider:
- Maximise Clicks: This strategy aims to get you as many clicks as possible within your budget. It’s like saying, “Let’s get as many people as we can to check out our ad!”
- Target CPA (Cost-Per-Acquisition): Here, you set a target cost for each conversion, like a sign-up or a purchase. It’s about saying, “I’m willing to spend this much to get someone to take a specific action on my website.”
Target ROAS (Return on Ad Spend): This one focuses on getting a specific return on your ad spend. It’s about saying, “I want to make sure I get back a certain amount for every dollar I spend on ads.”
Pricing Yourself:
Deciding how much to bid is like figuring out your budget for the game. Here’s how:
- Know Your Goals: Understand what you want to achieve with your ads. Are you looking for more clicks, conversions, or a specific return on investment? Your goals will guide your bidding strategy. If you’re after clicks and conversions you’ll have to bid in the medium-higher range.
- Consider Your Budget: Think about how much money you’re willing to spend. Bidding high might get you more attention, but it also costs more. Think about the length of your campaign. Running campaigns for longer is a lot more effective than spending all your budget in the first month.
- Check the Competition: See what others are bidding. If everyone is bidding high, it might be tougher to stand out. If competition is too great it might be time to look for different keywords.
Knowing When to Change Things:
It’s crucial to know when to change your strategy, make sure to:
- Monitor Performance: Keep an eye on how your ads are doing. If you’re not getting the results you want, it might be time to rethink your strategy.
- Check the Competition: If others are outbidding you consistently, it might be worth adjusting your bid. It’s like realising that everyone else is playing with higher stakes.
- Adjust Based on Goals: If your goals change or if you’re not seeing the outcomes you expected, be ready to tweak your bidding strategy.
With PPC, picking the right bidding strategy, pricing yourself effectively, and knowing when to switch things up are all part of the game. It’s about being strategic, keeping an eye on the competition, and adjusting your approach to ensure your ads not only get noticed but also deliver the results you’re aiming for.
