Google ADs Bid Simulator - Can You Trust It? 👀

Summary

In this video, the speaker critiques the reliability of the Google Ads Bid Simulator, explaining that it often overestimates or underestimates the impact of raising or lowering bids. Instead, the speaker advocates for using Search Impression Share to predict the effects of bid adjustments on clicks, conversions, and ROI. They emphasize the importance of cleaning up the Search Terms Report with negative keywords before adjusting bids and stress the need for careful analysis when raising bids, considering the impact on lead quality and conversion rates. The video also covers strategies for maximizing results with calculated bid adjustments.

Takeaways

• 😀 The Google Ads bid simulator is unreliable and often overestimates or underestimates the potential clicks and conversions from changing your bids.
• 😀 Google uses the bid simulator to encourage advertisers to spend more money, but it doesn't provide accurate insights into the actual impact of raising or lowering bids.
• 😀 Instead of relying on the bid simulator, a better approach is to focus on search impression share to estimate the potential results from bid changes.
• 😀 Search impression share is a more reliable metric to determine how raising or lowering bids can affect the volume of leads and sales.
• 😀 If you're not getting the ROI you want, reducing your bids proportionally (e.g., by 20%) can help adjust your results to your desired cost per lead.
• 😀 Adding negative keywords to your campaigns ensures that you're bidding on only the most relevant search terms, which helps avoid wasting money on unqualified leads.
• 😀 After cleaning your search terms report with negative keywords, use search impression share to understand the impact of increasing bids on your impressions and conversions.
• 😀 If your search impression share is low (e.g., 30%), increasing your bids to 90% impression share could significantly increase sales, but it may also lower your ROI due to higher costs per lead.
• 😀 Be cautious when using a higher Target CPA setting, as this can increase the cost per conversion significantly, but may also raise your impression share and lead volume.
• 😀 Once your impression share is above 90%, further increasing bids may lead to diminishing returns, making it no longer worth the effort to achieve 100% impression share.

Q & A

What is the main issue with Google's bid simulator?

The bid simulator in Google Ads is not reliable for predicting the actual impact of raising or lowering bids on clicks, leads, or sales. It often provides inaccurate estimates, either overestimating or underestimating the results, leading advertisers to make decisions based on false information.

What is a more reliable alternative to the Google Ads bid simulator?

A more reliable alternative to the bid simulator is using the search impression share metric. This allows advertisers to predict the impact of raising or lowering bids by showing how often ads are eligible to appear for the targeted keywords, thus providing a more accurate assessment of potential results.

How does search impression share help determine the effectiveness of raising bids?

By examining the search impression share, you can see how often your ads are eligible to show for the targeted keywords. If your impression share is low, raising your bids can increase your ad visibility, leading to more clicks and conversions. The higher the impression share you want, the more you will need to increase your bids.

Why is it important to clean your search terms report before adjusting bids?

A clean search terms report ensures that your ads are only shown to relevant users who are likely to convert. Without cleaning the report, raising bids might result in showing ads for irrelevant search terms, leading to low-quality leads and inefficient ad spend.

What role do negative keywords play in improving bid strategy?

Negative keywords help filter out irrelevant search terms, ensuring that your ads only show up for the most relevant queries. This improves the quality of your leads and ensures that when you raise your bids, you're targeting the right audience, leading to better ROI.

What is the relationship between search impression share and cost per click (CPC)?

To increase your search impression share, you generally need to increase your CPC. For example, to go from a 30% impression share to a 90% impression share, you may need to triple your CPC. This results in more ad exposure but can also reduce your ROI due to the higher cost per click.

What is the potential downside of raising bids to increase impression share?

The downside is that while raising bids increases impression share, it can also result in diminishing returns. After reaching about 90% impression share, any further increase in bids yields only marginal improvements in ad visibility and conversions, making it an inefficient use of ad spend.

How can you calculate whether raising your bids is worth it in terms of ROI?

To calculate if raising your bids is worth it, you need to understand your maximum acceptable cost per lead and ROI. You can then analyze if the increase in leads from raising your bids will offset the higher cost per lead, allowing you to determine if the additional sales justify the increased spend.

What happens if you increase your target CPA beyond your current cost per conversion?

If you increase your target CPA, Google’s system may adjust your cost per conversion, likely raising it to match the new target. For example, if you raise the target CPA from $40 to $60, your cost per conversion might increase by 50%, but it will result in more impressions and potentially more sales.

Why is waiting 30 days recommended after raising bids to assess performance?

Waiting 30 days allows enough time for Google’s algorithms to test and adjust placements based on the new bid levels. This period ensures more reliable data on whether the increased spend leads to more conversions, as opposed to making judgments too early, such as within the first few days.