Google Adwords Bid Simulator Reference Guide
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The document describes Google's Bid Simulator tool which estimates how an advertiser's keyword performance may change if they adjust their bids. It provides transparency into Google's auction process to help advertisers bid more effectively. The Bid Simulator estimates clicks, costs, impressions and position data based on how the keywords actually performed in the last seven days. This helps advertisers understand the potential impact of different bids without having to experiment directly. The document provides details on how to access and interpret the Bid Simulator's simulations and calculations.
![Bid Simulator | Practical example
… I’m the marketing manager at PowderSki.com and need to bid
more effectively in order to get promoted this year! What should I do?
Well . . . . I recall seeing an AdWords blog that described a
free feature that will give me the insight to make better bidding
decisions.
So, let's see what I can do here . . . Our most important
keywords (i.e. the ones that spend the most) get more than 30
clicks a week, so I should be able to see bids vs. click cost
data for them.
Let's look at [skis].
At our current bid of $1.00 we got 69 clicks for $32.20. What if I went up to a bid of $1.25. That would
mean 119 clicks for $68.10. Hmm is it worth it?
We make a profit of $50 per conversion and our conversion rate is 10%.
By increasing my bid to $1.25, I would be spending $35.90 more for 50 more clicks. I expect those 50
clicks to turn into 5 conversions (at our 10% conversion rate). And I expect those 5 conversions to bring
in $250 (since our average profit per conversion is $50).
Wow! Spending $35.90 to get $250 seems like a good deal. I should increase my bid to get those
profitable clicks.
Google Confidential and Proprietary 13](https://image.slidesharecdn.com/google-adwords-bid-simulator-reference-guide-090622075722-phpapp01/85/Google-Adwords-Bid-Simulator-Reference-Guide-13-320.jpg)
Google Adwords Bid Simulator Reference Guide
- 1. May 2009
- 2. Do you ever wonder … ? … if I increase my Max CPC bid from $2 to $3, how many more clicks can I expect to get? … what would be the new position of my ad if I bid $3 instead? … how much would the clicks costs? … how can I bid more effectively? Google Confidential and Proprietary 2
- 3. Bid Simulator: What are the advantages? Adds transparency into Google’s auction process and enables informed bidding decisions Estimates the click, cost, impression, and average position data that your ads would have received in the last seven days had you set different keyword Max CPC bids. Enables you to compare the performance of different bids and select the one that works best for you. Simplifies bidding process Reduces the amount of time spent doing trial and error experimenting with various keyword Max CPC bids. Enables calculation of incremental cost per click (ICC) Enables you to take incremental cost per click into account by communicating click cost information at different bid levels. More on what ICC is and why it matters later. Google Confidential and Proprietary
- 4. Bid Simulator | Can you use this? • Are currently using – Conversion optimizer You can not use bid – Budget optimizer simulator if you: – Position preference – Ads scheduling (advanced or basic) • Have campaigns that hit your budget Note: If you are an Enhanced CPC beta participant, you will see the bid simulator option but should not use it. If you use any of the above, bid simulator will not show up. Google Confidential and Proprietary 4
- 5. Bid Simulator | How does it work? Your quality score Your competitors’ bids and their quality scores We know Amount of traffic search network received last week Probability of a click on your ad given its position Google’s auction system Which position your ad would have shown at for any bid We The number of clicks you would have gotten at those estimate positions The cost of those clicks Note: This is a simulation of last week's data. Next week's results could be very different due to changes in search traffic or actions by other advertisers Google Confidential and Proprietary 5
- 6. Bid Simulator | Keyword thresholds In order to get simulations, your keywords must meet adequate traffic thresholds Keyword (in the last seven days) Feature simulates Receives adequate traffic • Click, cost, impression, and average position data Receives lower traffic • Click and cost data Receives hardly any traffic • No simulation data . . or keyword was recently added Google Confidential and Proprietary 6
- 7. Bid Simulator | Accessing the tool (step 1) Accessible from the AdWords front-end. Sign into your account, and you are ready to begin Select as many keywords as you want to see simulations for and click on “Edit Keyword Settings” Google Confidential and Proprietary 7
- 8. Bid Simulator | Accessing the tool (step 2) • Click “bid simulator” under any keyword’s search bid • You cannot choose keywords in bulk but must click the bid simulator link individually for each keyword Google Confidential and Proprietary 8
- 9. Bid Simulator | UI – Scenario 1 Scenario 1: Your keyword receives adequate traffic: shows the estimates of clicks, cost, impressions and average position for several bids ; Approximate hypothetical bid range: Max (2 x current bid) Min (0.5 x current bid) Google Confidential and Proprietary 9
- 10. Bid Simulator | UI – Scenario 1 (close-up) Scenario 1: Your keyword receives adequate traffic: shows the estimates of clicks, cost, impressions and average position for several bids Date range of simulation Current bid Google Confidential and Proprietary 10
- 11. Bid Simulator | UI – Scenario 2 Scenario 2: Your keyword receives lower traffic: shows the estimates of impressions and average position Date range of simulation Current bid Google Confidential and Proprietary 11
- 12. Bid Simulator | UI – Scenario 3 There are no estimates for a keyword that does not meet any threshold. either because the keyword was recently added or the bid is too low to receive any impressions Google Confidential and Proprietary 12
- 13. Bid Simulator | Practical example … I’m the marketing manager at PowderSki.com and need to bid more effectively in order to get promoted this year! What should I do? Well . . . . I recall seeing an AdWords blog that described a free feature that will give me the insight to make better bidding decisions. So, let's see what I can do here . . . Our most important keywords (i.e. the ones that spend the most) get more than 30 clicks a week, so I should be able to see bids vs. click cost data for them. Let's look at [skis]. At our current bid of $1.00 we got 69 clicks for $32.20. What if I went up to a bid of $1.25. That would mean 119 clicks for $68.10. Hmm is it worth it? We make a profit of $50 per conversion and our conversion rate is 10%. By increasing my bid to $1.25, I would be spending $35.90 more for 50 more clicks. I expect those 50 clicks to turn into 5 conversions (at our 10% conversion rate). And I expect those 5 conversions to bring in $250 (since our average profit per conversion is $50). Wow! Spending $35.90 to get $250 seems like a good deal. I should increase my bid to get those profitable clicks. Google Confidential and Proprietary 13
- 14. Bid Simulator | Things to note When a new keyword is added or a campaign started, simulations are generated once there is enough click or impression data Bid simulator does not simulate conversions or predict future results Data gets refreshed once a day Simulations are for Google.com and search only Bid changes do not hinder our ability to simulate For broad match keywords, the # of impressions (and, therefore, clicks) can change dramatically with each bid. Even for a KW with avg position 1.1, increasing a bid could make a significant difference in volume Google Confidential and Proprietary 14
- 15. Bid Simulator | Popular FAQs • Bid simulator and the Traffic Estimator use different data • The Traffic Estimator looks primarily at overall traffic patterns How is bid simulator different from Traffic • Bid simulator's results are specific to your campaign and keywords Estimator? • Bid simulator is more accurate at predicting results for a particular advertiser • AW3.0 • AdWords Editor Bid simulator is not • API available on … • .CSV downloads • Bulk changes How does it work for a • This is not available for content. If a campaign has both search and campaign opted into the content, bid simulator will only show simulations for search search and content networks? How does this compare to • This is not meant to replace 3rd party services for bid or campaign 3rd party bid management management, as they provide many services beyond bid estimates tools • This feature should help 3rd party bid management companies to be more effective in helping their customers Google Confidential and Proprietary 15
- 16. Bid Simulator | Planned future features Additional features • Simulation at ad group and campaign levels • AdWords 3.0 • API Compatibility with • Editor • Conversion Optimizer • Ads scheduling • Budget-constrained advertisers Google Confidential and Proprietary 16
- 17. Bidding Concept | Incremental cost per click (ICC) Bid simulator enables you to calculate your incremental cost per click. It’s important to understand this concept to utilize the feature fully ICC measures how much extra you need to pay for the extra clicks when moving from a lower bid to a higher bid Bid Clicks Cost CPC Change in cost Change in clicks ICC 3 31,200 $3,770 $0.12 $3,770 - $3,360 31,200 - 30,700 $410 / 500 = $410 = 500 = $0.82 2 30,700 $3,360 $0.11 $3,360 - $2,810 30,700 - 28,000 $550 / 2,700 = $550 = 2,700 = $0.20 1 28,000 $2,810 $0.10 --- --- --- Google Confidential and Proprietary 17
- 18. Bidding Concept | How to use ICC Keyword 1 Bid Clicks Cost CPC Change in cost Change in clicks ICC 3 31,200 $3,770 $0.12 $3,770 - $3,360 31,200 - 30,700 $410 / 500 = $410 = 500 = $0.82 2 30,700 $3,360 $0.11 $3,360 - $2,810 30,700 - 28,000 $550 / 2,700 = $550 = 2,700 = $0.20 Current bid 1 28,000 $2,810 $0.10 – – – Keyword 2 Bid Clicks Cost CPC Change in cost Change in clicks ICC C 21,545 $2,760 $0.13 $2,760 - $2,360 21,545 - 20,115 $400 / 1,430 = $400 = 1,430 = $0.28 B 20,115 $2,360 $0.12 $2,360 - $1,810 20,115 - 18,000 $550 / 2,115 = = $550 = 2,115 $0.26 Current bid A 18,000 $1,810 $0.10 – – – Scenarios: Which bid should I raise? • I have extra $600 approximately – raise keyword 1's bid from 1 to 2 because the ICC is lower than from A to B • I have additional extra $1,000 (beyond the extra $600) approximately – raise keyword 2's bid from A to C. Don't raise keyword 1's bid because the ICC is Google Confidential and Proprietary 18 higher
- 19. Contacts and Resources Contacts • AdWords help email • FAQs: Resources http://adwords.google.com/support/bin/topic.py?topic=19567 Google Confidential and Proprietary 19