Maximize ROI using the Google Bid Simulator

A few months back, Google released a beta version of a new bid simulator tool for a few accounts. This tool demonstrates the impressions, clicks, cost and the ad position of a keyword, if the bid price is increased or decreased.

Here are some features of the Google Bid Simulator:

1) Shows impressions, clicks, cost and average position data that ads receive in the last seven days with different maximum bids. It helps compare the performance of the bids and select the one that works best.

2) Reduces the risk and time spent on bid management.

3) Helps decide the cost per click by showing the click cost information at different bid levels.

How does it work?

Google’s bid simulator understands Google’s ad auction process, so it can indicate the correct rank in the first instance. In the second scenario, the bid simulator identifies the bid range for each position, but does not correctly estimate click through rate. The bid simulator is not very accurate as its results are based on the previous week’s actual bids and it does not include a predictive component to estimate competitor bid changes.

In order to get bid simulations, keywords must meet required history (decided by Google).

Scenario 1: Keywords that receive adequate traffic for the last seven days will have data on clicks, cost, impressions, average position and maximum cost per clicks.

Scenario 2: – Keywords that receive less traffic for the last seven days will get impressions, average position and maximum cost per clicks.

Newly added keywords or ones that do not have any traffic will not be simulated.

How will this tool help?

If we know, the Conversion Rate of keywords, we can choose the bid price that is suitable to increase the number of conversions and decrease the Cost per Lead (CPL).

E.g. Assuming the Conversion Rate for a keyword is 15% and the target CPL is $70, here is how the tool will help:

Based on the conversion rate, we can calculate the Conversions and the CPL for the keyword in this way:

Looking at the CPL here, we can bid $12.33 (highlighted) as it meets the targeted CPL ($70).

Learnings

1) As it takes more time to check each keyword’s volume at different positions or bids, the Google Bid Simulator helps us understand the trends for each keyword.

2) It helps in scaling up volumes in lesser time.

3) It is easy to identify optimal bids that suit your CPL goals.

4) It maximizes ROI by optimizing Search campaigns.

Contributed by Ajesh Bojanapalli