Pay Per Click August 13th, 2009
Trudging around the various SEM forums on the Internet, I'm getting a feeling from other PPC marketers about the new Google AdWords Bid Simulator similar to my own. And it's not good.
The AdWords Bid Simulator was released in order to help pay per click advertisers rank better in Google search results, and have their ads appear for as many impressions as possible. This was the basic premise behind the tool. In my mind, it was moved out of beta before it was ready.
The prices recommended are incredibly high, and are giving other users the impression that Google created this tool to take advantage of the 'rookies' and other irregular users of Google AdWords. Making advertisers bid high per click prices in order to simply make more money off of their clicks hence, not encouraging the creation of highly optimized campaigns.
I mentioned in a previous post that the premise behind Google Bid Simulator made sense. It creates income for them through the Google Adwords advertising platform. But the 'recommended bid prices' are incredibly high and seem way out of whack with reality.
Let's look at a keyword in one of our accounts. One that consistently ranks high in Google's PPC search results.
This word has an average position of 2.6 and has converted 4 times this month for a fantastic conversion rate of 8.51%.
If you look on the far left hand side you will see the small Bid Simulator icon beside the default CPC bid price. Clicking on the button brings up the Bid Simulator window and bid recommendations for this keyword.
Here's where I get a little wary of the tool. We have already accrued 47 clicks this month on this keyword, but the Bid Simulator tool is recommending I up my Max CPC bid price to an incredible $22.86 per click in order to receive 41 clicks.
Now, I realize that I only managed a 58% in Grade 12 math, but that's more related to the fact that I just hated math. But even I'm not going to be fooled into bidding 22 dollars for 6 fewer clicks than I'm receiving with my current bid price of $7.00. On top of that, my actual cost per click is only $3.91 this month for this keyword! Why on earth would I want to blow through my client's budget for 10 more impressions and 8 more clicks? I'm not sure the daily budget could even accommodate an increase like that.
Assuming that such a difference probably won't result in additional conversions over a similar period, adding an 'estimated' $140.00 to the keyword each week means I would now have a CPA of $67.75 instead of the $45.98 I now have. That's an increase of just over 47%. I'll keep my 46 dollar CPA – thank you not so much.
The Max CPC bid prices presented by the tool above are staggering. Given the increases in impressions and clicks it also gives.
As previously mentioned at the outset of this article, I'm not the only one making these observations. The keyword used for this example is not an anomaly amongst every keyword we've used for other clients. It occurs quite regularly from keyword to keyword.
One hopes that Google is working on something a little more realistic when it comes to the Bid Simulator recommendations.
The premise of the Google Bid Simulator is good. Maybe there is something I am overlooking in the application of this tool. But the main point is that if a Pay Per Click manager, who is using this tool every single day cannot grasp the application of this tool then how in the world will a novice?
Kudo's to Google for trying and perhaps they will improve the functionality of the tool.
For now, I'll continue to trust my own judgement based on the data presented in my Google AdWords accounts.