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As the advertiser, you also need to know the value of each conversion. You need to know this so that you
don’t pay too much for your clicks, and so that you bid to have the best CTR for
maximum return on investment (ROI).
Figure 7.8 How to Adjust Bidding Strategies Based on Business Principles
Figure 7.8 "How to Adjust Bidding Strategies Based on Business Principles"shows how you might adjust
bidding strategies based on business principles such as the following:
- Example A. Bid on a keyword with phrase match.
- Example B. Bid on the same keyword with phrase match, but bid for a higher position. The
conversion rate of the Web site remains the same, but because of the higher CPC,
the CPA (cost per action) increases, although there are more conversions. - Example C. Bid on the same keyword, but with broad match this time. Because the traffic is less
targeted, the conversion rate on the Web site is lower. This means that the CPA increases again.
The campaign needs to be run according to business rules. A PPC campaign can aim for maximum
conversions, but this is usually at a higher CPA.
Budgets
As well as deciding on your CPC bids for your keywords, you are able to determine the budgets for your
campaign. You can set daily budgets, monthly budgets, or no budget. Once your budget is reached, your
advertisements are paused, so you can be sure that you never overspend. If you are concerned about
overspending, you can set a daily budget. However, this can mean that your advertisements do not run as
often as you would wish them to.