Why You Might Be Wasting Money on Bid Modifiers

Why You Might Be Wasting Money on Bid Modifiers

With the holiday shopping season here, it’s time to re-examine how you’re using bid modifiers in your paid search campaigns. You might be wasting your budget by using too many modifiers.

Google continues to introduce more refined targeting features such as gender, income level, audience targeting, and look-alike audiences. Soon you’ll have in-market audiences. Having more targeting options for your campaigns is good. When businesses serve up more relevant ads, everyone wins: the consumer, the advertiser, and Google.

But here’s the problem: it’s too easy for advertisers to pile on the bid modifiers to their campaigns. Just because you can target by device, location, gender, age, and time of day (to cite just a few modifiers) it doesn’t mean you should.

Let’s say you are a brick-and-mortar retailer advertising a personal care product to women of a certain age. Your research shows that your target age range is likely to respond favorably. You launch your campaign and start achieving results. Then you decide that maybe, just maybe, you’ll earn more if you target a higher income bracket at a certain time of day. Then you discover that your company is opening a new store in Orlando, and so you modify your bid to target the location. Well, the more you refine your bid, the more your campaign is going to cost.

Here’s what happens when you pile on too many modifiers:

  • You can waste money. Your costs per click increase with each modifier. The next thing you know, you’re overspending because you’re trying to reach a highly targeted audience when advertising to a more broadly defined set of consumers might have achieved as good or better a result for less money.
  • You dilute your ability to measure performance. You might see improvement in a campaign. But with 10 different bid modifiers in place, how do you know which one is moving the needle?

This issue has persisted for years. In 2013, Erin Sagin of Business2Community warned about using too many modifiers as part of Google’s Enhanced Campaign feature:

In reality, this feature can result in vast overbidding. Here’s the catch—if a search fits the criteria for multiple bid modifiers, all adjustments are “stacked” on the base bid. For example, imagine that a keyword’s base bid is $1 and you’ve set your device modifier to increase bids by 100% on smartphone searches, your geographic modifier to increase bids by 50% for searchers located in Florida, and your time of day modifier to raise bids by 100% from 9 p.m.-11 p.m. If someone in Florida searches this keyword on their phone at 9 p.m., the bid will automatically be bumped to $6.

But advertisers continue to struggle with overbidding, one reason being that they just aren’t aware of the problem or they cannot resist the lure of experimenting with more targeted advertising as AdWords introduces new features.

To guard against the temptation of piling on with too many modifiers, KeywordFirst suggests:

  • Define your marketing strategy and stick to it. A sound strategy encourages a disciplined spend. Your keyword bids should reflect your agreed-upon product development and rollout campaign. Don’t create keyword bids on the fly. But if your marketing strategy changes, then re-examine your keyword strategy and modify accordingly.
  • Limit your bid modifiers. Apply only a few at a time. If you want to experiment with another modifier, consider dropping one. Limiting your modifiers helps you isolate which ones are performing the best.
  • Use negative modifiers instead of positive modifiers. Instead of adding on to your bid to reach an audience, add negative bids to audiences you don’t want to reach. It sounds so simple, but not enough advertisers use this tactic. Doing so makes for a more efficient spend.

Bottom line: be disciplined and strategic about your bid modifiers. Remember the adage: just because you can doesn’t mean you should. For more insight into digital advertising, contact KeywordFirst. We’re here to help.

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