Are your Google Ads CPC max bids too high or too low?

One of the key elements in a successful Google Ads campaign is finding the “sweet spot” for your max bid price that works cost effectively for your business. It’s much more complex than it might at first seem to find that “sweet spot”.  It’s not as simple as setting the max bid to the most you are willing to pay for a click. You might be paying too much for each click or indeed not be bidding enough. In addition that “sweet spot” can move over time as competitors enter the market.

Google Ads Costs Per Click (CPCs) vary considerably and are driven in part by the level of competition in your target market. In competitive markets you can find your CPCs rising to uneconomic levels if you set your max bid prices too high. If you set your max bids too low in competitive markets you can find your exposure to audiences limited, sometimes to the point where your Ads are rarely shown or only shown to markets where your maximum bid applies.

Firstly, it’s important to establish what you can afford to pay for clicks and the only way to do that is to measure the effectiveness of your spends in each campaign. Knowing what you can afford to pay to remain profitable is however only part of the puzzle. In addition, it may be that your calculation of what you can afford is not taking into account the longer term business from newly acquired customers. In which case you may be under valuing the clicks you are seeking and being priced out of your market. Further, it may be that your competitors have deeper pockets and are paying more than they can afford, in which case you have to be very careful not to get into a bidding war!

Balancing these competing factors and getting your max bid price right is an art, particularly as it’s a fluid marketplace. You can end up chasing your tail and get into an endless game of cat and mouse with your competitors all fighting over the same clicks wasting a lot of time and energy that could be better spent on managing your real business.

The solution is to be sure of your facts and “stick to your guns”. To set bid prices within some sensible bounds to ensure that you remain profitable even in fluctuating external market conditions.

Secondly it’s important to be aware of how Google calculates your CPC. We say “your CPC” because each advertiser pays an individual price for clicks and it’s not about who pays the most comes at the top. It is quite possible and (more often than not) quite likely that businesses occupying the top slots in Google pay LESS than those in lower positions. This may seem counter-intuative but Google (in a sense) rewards those advertisers who run great campaigns that satisfy their users searches.

What qualifies as a great campaign has multiple factors and many of these factors determine your CPC. High “quality scores” for your campaigns keywords can give you significant “discounts” on your CPCs. Sometimes as much as 40%. So if you are running a large campaign working on improving your quality scores can significantly reduce your overall marketing spend.

So could your Google Ads max bids too high or too low? Do you know? You should as it’s a key metric to the success of your business. And when you do know you can then work on finding the “sweet spot”.

Contact us to discuss your Google Ads campaign.