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Calculating Bid Adjustments: How to Set More Specific Bids In AdWords

Clicks on search ads may have different levels of value depending on several factors including location, time of day or the device used, so we don’t want to be bidding the same for each click. In this blog, I cover all the different types of bid adjustments in AdWords, how they can be calculated, how multiple adjustments stack up against one another, and whether there are alternative, less time-consuming methods of setting more specific bids.

Why Should We Use Them?

Bid multipliers do exactly what they say on the tin - multiply your bids by a percentage, based on different dimensions and audience characteristics. We use them to help raise the likelihood of a conversion. Although two people may search the exact same query, one could convert whilst the other wouldn’t. Even though their search queries are identical, other factors such as demographics, location, or the device they are using have an influence over the probability that their search will lead to a conversion. For these reasons, once we have enough historical data we can use bid adjustments to increase or decrease our default bid for audiences who fall within certain characteristics.

Where Can I Use Them?

Multipliers from -100% to +900% can be applied to a range of different dimensions in AdWords. Some can only be set at campaign level, whilst others can be set at ad group level as well. Remember that if you have multipliers set at campaign level and at ad group level within a campaign, the more granular ad group level multipliers would always take precedence. 

  • Device multipliers can be set to increase, or decrease, bids for people searching on a specific device. They can be set at campaign or ad group level for desktop, tablet and mobile devices. They range from -90% to +900%, however you can now opt out from advertising on a device completely by setting it to -100%. 
  • Location multipliers can be set to increase, or decrease, bids for people searching in certain geographies. They can only be set at campaign level and range from -90% to +900%. Try not to get these confused with location extension targeting that allows you to set different bids for people in a certain radius around your business.
  • Ad schedule multipliers can be used to increase, or decrease, bids for certain days of the week, or hours of the day. You can use these with manual bidding if the campaign is opted into ‘All Features’ (this will no longer be a thing if you’re using the new interface!). The only bidding strategy you can use ad schedule multipliers with is Maximise Clicks. You can set up a custom ad schedule at campaign level, and then set bid adjustments for certain times that range from -90% to +900%.
  • RLSA multipliers can be used to increase or decrease bids for people on certain remarketing lists. They can be set at either campaign or ad group level, and range from -90% to +900%.
  • Demographic multipliers can be used to increase or decrease bids for different age groups or genders. You can set these by going into the Audiences tab and selecting demographics at the top. They range from -90% to +900% and can be set at ad group level.
  • Top content multipliers can be used for YouTube and Display ads to increase bids for content that’s more popular and has higher levels of traffic and engagement. They are set at ad group level and range from 0% to 500%.
  • Targeting multipliers can be used for Display ads to increase or decrease bids for certain topics, placements or other targeting methods. They are set at ad group level and range from -90% to +900%.

How Big Or Small Shall I Go?

Big dog, small dog

Considering you can apply multipliers anywhere between -100% and +900%, advertisers have a huge spectrum to choose from once they decide that they want to utilise them. Luckily it’s not guesswork, and there’s a pretty simple calculation to follow. For ad schedule, device and location multipliers head to the ‘Dimensions’ tab in your chosen campaign and choose what you want to ‘View’ depending on which adjustment you want to set. Let’s do an example of how we’d go about calculating location bid adjustments for a retail shop with a store based in Manchester. 

Select an appropriate date range (roughly 3 months, but make judgements based on the size of traffic in the account) and in the ‘Dimensions’ tab select ‘User Locations’ from the drop down ‘View’ menu. Conversions are the ultimate goal for this retail client, so use a filter to view location with more than 20 conversions (or the amount perceived to be a good number for your client). Conversion rate will be the multiplier that you base your bid adjustment decisions on for clients with conversion goals. The average conversion rate for the campaign will be used as the benchmark for the bid adjustment calculation. Now follow the below calculation:

As the client’s shop is based in Manchester, the conversion rate for consumers in Manchester is quite high at 8.45%, compared to the campaign average of 5.73%. Therefore, a bid adjustment for Manchester would be calculated by:

The calculation comes to 47.46 so you would set a +47% bid adjustment for Manchester. To set this, add Manchester as a targeted location in the ‘Settings’ tab and apply the multiplier directing in the interface. You can set bid adjustments based on other account goals. For example, if your client’s goals were getting people onto the site you could calculate bid adjustments based on other metrics such as CTR, but be sure to factor in bounce rates as there is not much value in lots of people clicking through to the site but leaving immediately after!

What Happens if I Set Multiple Bid Adjustments?

So, you’ve strategically sifted through each dimension of your campaigns, but are wondering what this means for your final bid in the AdWords auction. The main point to bear in mind here is that Google performs the multiplication on your bid adjustments, not the sum. To illustrate this let’s continue with our retail client example. We notice that customers are much less likely to convert on mobile than desktop, so we’ve completed our calculation and want to set a -20% bid adjustment for mobiles. A customer searches for the shop from within Manchester on a mobile. For a default bid of £1 and the following adjustments: +47% for Manchester and -20% for mobiles:

£1 + 47% = £1.47

£1.47 + (-20%) = £1.17

Instead of using the sum of the adjustments which would result in +27%, each adjustment is applied sequentially to the multiplied bid. The final effect on your bid is a +17% adjustment.

It’s worth noting here that multiple device and multiple location bids behave slightly differently;

  • Multiple device adjustments: If you had a campaign and ad group level device bid adjustment set, the ad group level would trump the campaign level. However, if the campaign level is set to -100% (opting out of the device) the ad group level bid adjustment would not be used.
  • Multiple location adjustments: The most granular adjustment always takes precedence, and if two locations are met they will not be multiplied together. For example, if you had a +20% location bid adjustment for the UK and +47% adjustment for Manchester, the +47% for Manchester (the most specific location) would take precedence for customers searching within Manchester, and it would not be multiplied by the +20% for the UK.

What If This All Just Seems Too Time-Consuming?

It’s fair to say that the process of strategically sifting through an account and calculating bid adjustments is a hefty one, and on top of that you’ll need to be reviewing the data and recalculating adjustments that need tweaking. If it’s not feasible to be doing this manually for your client, you can set up bidding strategies in AdWords and DS to automatically set the optimal bid adjustments based on conversion or revenue goals. These can be used for mobile, location, or audience list bids. They find the optimal bid by utilising historical data within your account, so make sure you have collected enough data.

Essentially, it’s up to you to think about the amount of time you have, the size of the account, and the ultimate goals for your specific client. Once you’ve evaluated this you can decide how you want to go about setting more specific bids within your account.