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Home > Blog > Digital Marketing > PPC >

Keyword Bidding Strategy for Profitable PPC Campaigns

What business doesn’t want to save revenue slipping through the cracks?

Modern digital marketers have a lot to consider when it comes to paid advertising, and sometimes it only takes minor adjustments to significantly reduce costs and increase profit.

You may find your campaign is getting great traffic and high conversions in one week but is struggling for attention the next. This ebb and flow is part and parcel of marketing, but the impact on your bottom line is something you can exercise some control over.

Whether it’s a drop-off in customer interest or a dwindling budget, it’s important to look at cost-cutting strategies to ensure we get a good return on advertising spend (ROAS).

At the very least, we need to safeguard against going bust because of poorly-managed marketing expenses.

One key area where marketers can optimize their advertising budget is their keyword bidding.

keyword bidding strategy
How a Keyword Bid Decrease Can Generate a Higher ROAS

There are several factors that influence our keyword bids, including demand, competition, customer interest, etc.

Occasionally, marketers adjust their bids, increasing them to get more impressions and attract more customers, or decreasing bids to save on wasted spend. By lowering our keyword bids, we not only reduce cost but potentially increase overall return on investment (ROI).

The main challenge with adjusting keyword bids comes down to identifying which keywords to act on, which is exactly what PPCexpo is going to help you with in this article.

By the end, you’ll understand how to approach a keyword bid decrease, and where to apply your cost-cutting initiatives first.

The Four Categories of Keyword Bids

In an ideal world, our keywords will come at a low cost but still generate a great conversion rate. Realistically, you won’t find a lot of these gems, especially in popular niches.

For the majority of your keywords, you’ll be dealing with lower conversion rates and higher costs. It’s crucial that you know where to draw the line so you can reduce cost.

In its lifespan, a keyword will generate impressions, elicit clicks, build up a click-through rate (CTR), and finally, it will drive conversions. In PPC advertising, marketers must consider these conversions as the overall ROI, and weigh it up against the keyword bid value.

When it comes to cost-cutting, which allows us to place keywords in four separate categories:

  1. Low ROI — High Cost – i.e. higher wasted cost and possibly higher bid value
  2. Low ROI — Low Cost – i.e. higher wasted cost and possibly lower bid value
  3. High ROI — High Cost – i.e. low wasted cost and possibly higher bid value
  4. High ROI — Low Cost – i.e. low wasted cost and possibly lower bid value
ROI-cost-matrix

Let’s look at each of these categories in more depth to see how a keyword bid decrease could impact your profit.

1. Low ROI – High Cost

When it comes to reducing your keyword spending, the keywords in this category will be first up on the chopping block.

Perhaps the customer isn’t interested, or maybe your ads need to be refined. In either case, if you find your most expensive keywords get lots of clicks, but aren’t yielding conversions, you should turn the tap off before they drain your budget.

2. Low ROI – Low Cost

The next category to review can vary depending on your goals. Some people may simply be trying to reduce cost across the board due to budget constraints, so removing low cost keywords in this category may not be your top priority.

But what if you want to optimize your marketing campaign with strategic keyword bids?

While the keywords in this category may not cost much, the low ROI makes it easy to cut them out, as the loss in traffic won’t do much damage to your campaign.

You can save some money, and also optimize your campaign so you are only spending on keywords that really deliver results.

3. High ROI – High Cost

When your budget really gets tight, you may need to continue cost-cutting to the point of sacrificing some high-value keywords.

It’s important to consider the keywords in this category very carefully, as they all have great potential for driving traffic and conversions. However, as all of them also come at a high price, you need to consider each one and decide ‘is the juice is worth the squeeze’.

A good method for simplifying this decision is to rank the keywords in ascending order, based on the “Conversion Value/Cost” metric. The keywords listed at the top will be generating less profit, which makes it easier to know where to apply your keyword bid decrease.

One caveat of this strategy is that PPC customers don’t usually input the conversion values when setting up a campaign, so you’ll need to some number crunching in Google Ads to figure everything out.

4. High ROI – Low Cost

The final category is the core of your campaign. As aforementioned, there probably won’t be a lot of keywords in here, so you’ll want to hold on to these assets, even when you are trying to cut advertising spending to a minimum.

If it’s absolutely necessary, you can make some minor tweaks to trim any wasted spend. Ultimately, you should aim to maintain your quality score, so take care that changes in this category don’t upset your impressions or average position metric.

Key Metrics to Consider When Cutting Cost of Keywords

In PPC advertising, there is a plethora of metrics to keep an eye on. When it comes to reducing keyword bids, you should know which metrics matter.

Here is a guide to help you decide where to reduce your spending.

Conversion-based Keywords

Conversions Rate, Cost Per Conversion, Impressions, Search Impression Share, Search Rank Lost Impression Share, Conversions, Clicks, Cost, Average CPC.

Customers Engaging Keywords

Average Time On Site, Bounce Rate, Percent New Visitors, Average Page views, Impressions, Search Impression Share, Search Rank Lost Impression Share, Quality Score, Average CPC.

Clicked Keywords

Search Exact Match Impression Share, Search Impression Share, Search Rank Lost Impression Share CTR, Keyword Competition, Search Rank Lost Impression Share, Average Position, Impressions, Average CPC, Keyword Match Type, Cost, Clicks.

ROI is of Paramount Importance when Reducing Keyword Bids

All of us would love to earn more for spending less. In paid advertising, generating the maximum ROI on our keywords is the ultimate goal, but it’s much easier said than done.

As markets evolve, competition increases and customer interests change. Marketers must keep a close eye on their campaigns to understand the difference between a temporary lull and a bad investment.

Even if you have a large marketing budget, it’s smart to look for ways to reduce costs where possible, especially if certain keywords aren’t bringing you results.

By focusing on the ROI of individual keywords, you can cut back on advertising expenses to optimize your campaign and the overall financial health of your business.

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