Google is releasing a new version of AdWords Editor that you’ll want to keep an eye out for. Jason Shafton at the Inside AdWords Crew breaks down some of the new functionality and shares a number of resources to look into it further. AdWords Editor 8.0.1 is going to help us manage our local ads, has collapsible and expandable panels to help us organize the interface, adds progress bars, additional error messages to help narrow down mistakes, and some other helpful additions. At the time of this post, the latest version was still 7.6.1 but keep an eye out here for the new one.

I’m beating this topic to death because of its importance and I’ll probably continue to do so, at least through September, but we have another Search Alliance article this week. This one is from Tina Kelleher at the adCenter Blog and highlights some resources the Microsoft Transition Center offers.

Jen holds the honor for writing our most trafficked blog in the month of August. In her post, Jen tells you everything you need to know about the Google Adwords Segment tab. This handy feature in the Adwords interface gives you a multitude of reports for managing your accounts efficiently. Take some time to mine through the data within the Segment tab and be assured that you will discover even the finest details of your account performance.

Have you had the opportunity to explore the recently released Experiments setting from Google? If not, Erin has a rundown of her experiences with the new Adwords tool and even shares some of her results over the past month. This tool makes A/B split testing a breeze and after reading Erin’s list of pros and cons, you’ll be ready to make smart, tested adjustments to your account in no time.

Ad text testing is complicated, time-consuming, and some might even say painful. Lucky for you, Jessica is here to … well, to agree with you. Have no fear though, she brings tips, tools, and experience to guide you through the nightmares of ad text testing.

With the upcoming Bing/Yahoo merger, Amy kindly delivers a Bing tip to help with your transition. Specifically, Amy covers all the details of Bing dynamic ads. Dynamic insertion is a great strategy to boost account performance as you can deliver many highly targeted ads to customers while only drafting one ad text. Take Amy’s lead and start preparing for the Search Alliance today!

You might be asking yourself if you have a need for this information. Truthfully, it depends on what engines you’re currently working on. Basically, if you are running PPC on Yahoo or Bing, then pay attention. If you haven’t ventured into these PPC markets but are interested in doing so, read on to help understand the alliance. If you couldn’t care less about these engines but do work with AdWords, there is still some value in understanding how competing markets are changing. Honestly, the information is important to anyone advertising with search engines, just more so if you’re using Yahoo or Microsoft.

If you’ve signed into a Yahoo account in the past day or so, you’ve probably noticed something new. If the picture below doesn’t ring any bells, you’re guilty of ignoring your yahoo account.

This tab is Yahoo’s obvious way of reminding their current users to transition their account. Hopefully, by this point you can agree that this is a necessary evil. The next step is understanding the alliance. My recommendation is utilizing the resources provided from the source. Start with the Search Alliance homepage. Outside of taking the time to explain the reasoning behind the move, it’s also a great hub for additional resources. Yahoo has it’s own Transition Center page and coincidentally, there is a Microsoft Transition Center as well. I honestly feel that those are the best sources for understanding the change and the sites aren’t so deep that you can’t read through them quickly. There is no doubt that this transition is going to take some of your valuable time on the front end but in the end, you’ll have one less account to manage (yay!).

In addition to the pages from Yahoo and Microsoft, there are plenty of articles out there to help educate yourself on the topic (you’re reading one now). Check out our PPC Roundups over the past several weeks. I’ve been pointing out some great articles on the topic. In particular, the one in the previous link talks about how your bid strategy might (should) change.

Moving on in our transition, it’s time we start talking about the differences you’ll want to take note of. Yahoo has supplied a great document that has all the details you’ll need to understand the differences. To download it, sign into your Yahoo account, go to the adCenter tab shown above, and it will be on towards the right side of the screen. I’ve included a screen cap so you know what you’re looking for.

The document lists a number of changes that you will need/want to take note of. This will be of particular importance if you don’t have much experience working with Microsoft adCenter. First and foremost, there are a number of Yahoo elements that will not be supported in the adCenter interface. To hit on some examples of what won’t be coming with your Yahoo account, here’s a brief list:

Master Account Users (for those of you new to adCenter), Campaign Optimization, Content Match Budget Allocation, the Watch List, Ad Names, Long Descriptions, Enhanced Tracking Parameters, Age Bid Adjustments, Underage Blocking, Male/Female Bid Adjustments, Daypart Bid Adjustments, and Zip Code Level.

I highly recommend reading this document. In addition to pointing out the aspects you’ll lose in the transition, there are a number of recommended actions that should be taken before AND after you move your account. I’ve included a couple examples here to give you an idea as to what I’m talking about.

Hopefully you can see why this document is so important in helping with an effective transition. The only way for me to replicate that information would be to type it out word for work and I’m not a big fan of plagiarism.

So now that your account is prepped and you’re ready for the move, what do you do? It’s really not that difficult at all. If you go back to the adCenter tab in your Yahoo account, the second tool below the compatibility guide is a simple account download option. That tool will allow you to easily download your yahoo account so it can later be uploaded into adCenter – hopefully after you’ve taken the recommended precautions (last reminder to read the compatibility document).

Once you’ve got your campaign template from yahoo it can easily be uploaded into adCenter. If you don’t already have a Microsoft account, the first step is creating one. Once you login to Microsoft adCenter you should notice a “Getting Started” box towards the lower right portion of your screen. In that box is an option to import campaigns from Yahoo. Importing the account will be fairly straightforward, just follow the on screen prompts. Once you’re import has taken place, remember to go back to the compatibility guide to reference the items that are recommended to take place after the transition. Congratulations, you’re now advertising on the combined network!

I think the key component of making the transition a smooth one, is understanding why it is taking place and the primary differences in the accounts. I believe the alliance will be a good for everyone involved. I know I will really appreciate having one less interface to manage. Plus, the additional market reach for your time investment is outstanding. The only real gripe I have is that my office uses Apple computers so we’ll be fighting over remote use to desktop editor on our lone PC (unfortunately Microsoft Editor isn’t Mac compatible). Without knocking the PC folks out there, I really hope Microsoft Editor gets Mac compatible before the transition is complete. If not, it will be a bittersweet change around these parts.

If you are looking to find a good way to start your advertising on the content network, a good way to do so is to find out the top ranking blog and news sites on Google.  According to Kevin Burns, the top five sites for contextual advertising are Weather.com, CNN.com, NYTImes.com, HuffingtonPost.com, and FoxNews.com.  All five of these sites generate a massive amount of traffic, and depending on your target market, these sites offer both sides of any demographic spectrum.  So give contextual advertising a try—the upside is enormous.

In continuing the recent PPC Roundups trend, we’ve got another great article about the Yahoo/Microsoft transition. George Michie points out some possibilities for traffic value and how this change will affect them. The article provides a good outline for developing your bid strategy for the merge.

Creating Account, Campaign and Ad Group Level Reports

So, first and foremost, to create a report from the Campaigns tab you need to click on the arrow in the tool bar below the navigation tabs. This will then give you your download options, and a chance to name your report. Remember that specific names will help you later, so try not to use the generic default names. You will also have the ability to choose a Segment (ie: network, certain time frame, click type, device) to help you filter the data.

It is important to note here that should you download a report upon logging in, the data included in the report will represent your default settings. This means that your date range will automatically be the last 30 days, and the campaigns or ad groups you see on the screen will be in the report. The date is certainly something to think about, because you cannot edit this field after the report is created without creating a similar report, and running it as a fresh template.

In order to filter your results, you will need to actually set and apply a filter, then download the report. The filter system is fairly straightforward, just remember that they follow AND logic, so the criteria that you set will need to apply for results to show up. For example, if you say Status = Eligible and Avg. Position is better than 3, only the items that match BOTH criteria will be included in your filter.

So once you’ve created your report, where do they go? On the left hand side of the screen you will see a list of all of you campaigns, and at the bottom there is a link called Control panel and library. Click on this link, and you will be taken to a list of all of the reports that you’ve created. Unlike the old reporting interface, you aren’t limited to seeing only the last 15 reports run (thank you Google!). You will quickly see that the more specific your naming conventions, the better, especially when you have three that say “Campaign report”, so as I said before, keep that in mind when creating a new report.

Editing Your Reports

The following fields can be edited from the control panel page:

1. Report Name – Simply type in a new name.
2. Format – You can choose from a variety of formats such as .csv, .pdf, and .xml.
3. Email – Depending on the report, different people may need to see the data, so you can choose to email just yourself, all account users, or no one at all.
4. Frequency – Each report is set by default to only run once. However, you can choose to run it daily, the first day of the month, or the same day of the week that you originally ran the report on (for example, a report I create today can be set to run every Wednesday).

Once your reports are created you can choose to run them immediately, or create a similar report. As stated earlier, should you want to set a custom time frame, you will need to create a similar report, change the date range from the original report, and run a new one.

Reports Available On The Campaigns Tab

Not all of the reports from the original reports tab are available yet on the campaigns tab. However, the following reports are already available, and just like before they will show you the following:

1. Account Reports – Summary of your entire account data to give you a high level idea of performance.
2. Ad Reports – Metrics relating to text, image, video, mobile, and local business ads.
3. Ad Group Reports – Data pertaining to your ad groups across every campaign.
4. Campaign Reports – Data pertaining to the campaigns in your account.
5. Keyword Reports – Data pertaining to the performance of all of the keywords across every campaign and ad group.
6. Placement Reports – Data pertaining to the performance of the display network (previously known as the content network).

Though the keyword, ad, and placement reports are available on the campaigns tab, they are also still available on the reports tab, but knowing that Google is moving toward reporting from the campaigns tab, I would recommend getting to know the new process to help alleviate future learning curve headaches.

The Dimensions Tab

The final part of creating new reports from the Campaigns tab is the dimensions tab. If it is not already showing in the interface when you log in, click on the down arrow directly to the right of the Ad Extensions tab, and you will see a check box next to the Dimensions Tab option. By checking that box, the Dimensions Tab will be added to your interface for future use.

So what is the dimensions tab for? It is used to help you create reports that require larger amounts of data. You may notice that if you set your time range back to far on the campaigns tab, and try to download a report, say on the day level, it will tell you that the report cannot be created. In order to resolve this issue, you need to create the report from the Dimensions tab.

From here you can create reports for various time periods such as Day of Week, Day, Week, Month, Quarter, Year, and Hour of Day. You can also edit the columns that you are included so you can extend or eliminate certain metrics to make the report as customized as you want.

All in all, the new reporting system should be helpful, and I hope that it will eventually streamline the process for gathering data for various reports, so hang in there, and keep trying different filters and segments!

Generally speaking, the higher your keywords’ Quality Scores, the more Google will like you. And the more Google likes you, the less it’ll charge you for your ads to appear in strong positions in the SERPs.

But there a few instances when low-Quality-Score keywords might actually be a good thing. Here are three situations when it’s OK to have low-Quality Score keywords:

1. The keywords are bringing you a high return on investment.

Your keywords’ Quality Scores may be below 4 or 5 (on a scale of 1 to 10), but if their associated ad is achieving a large net profit, you might want to tolerate those low Quality Score keywords. While your ad might be a little lower in the search results than you’d like, you are making good money.

One possible explanation for your situation is that you have a low click-through rate, but a high conversion rate. Not a ton of people are clicking on your ad, but those who are are buying your product or registering for your free download. That must mean your ad copy is highly relevant to your offering.

2. The keywords are valuable for branding.

Maybe you’ve surveyed customers to see what keywords they think best describe your product or service. But for some reason, some of those keywords have low Quality Scores in your advertising campaign. You may not want to remove those keywords if you feel they are serving a significant branding purpose.

Even though your click-through rates might be low, at least your ads are informing viewers about what you offer. And maybe those people are coming back at a later time to convert.

One way to measure whether or not people are coming back is by looking at your view-through conversion statistics in your AdWords account. Your view-through conversion rate, for example, tells you the percentage of users who viewed an ad and neglected to click on it, but within 30 days went to the ad’s associated landing page and undertook the desired action.

3. You are just starting an AdWords campaign.

If you are just starting an AdWords campaign, it’s understandable that you have low-Quality-Score keywords. You are still learning about optimizing ads and landing pages, and have yet to put all your knowledge into practice. While some people might wish all their keywords had high Quality Scores from the start, others might see the benefit of not having a perfect campaign right away.

Not having perfect Quality Scores initially means you will develop the good habit of doing your research and tweaking your campaign. If Google ever changes its Quality Score formula, or if you decide to advertise with another search engine, you will be well positioned to handle these changes. You will seek out information, and improve your campaign. But if you are used to having perfect Quality Scores that don’t require any effort, you will have a tough time adapting to new Quality Score rules.

About the Author

Christine Laubenstein is a Marketing Associate at WordStream, a provider of an advanced pay-per-click tool suite, designed to improve the performance of pay-per-click keywords in your AdWords campaign.

PPCBlog has a really great article on how traditional high-level marketing skills apply to PPC. Lets face it, so many of us web marketers don’t have a traditional marketing background and/or no traditional marketing training. The PPC market is competitive. Use these skills to your advantage.

Wpromoter’s Jamie Lane blogged about a great case study, in which Lumaneers diversified their traffic and boosted conversions. They did this through a combination of SEO and PPC strategies. Their original problem areas are something I think is pretty common and their solution is something we can all apply to our strategy. See what you can takeaway from this great article.

Dynamic insertion is a great strategy because, if used correctly, it has many benefits.  You can use the same ad to make several, very targeted ads.  You can also update and revise these ads in a snap, when needed.  On top of that, according to a study by Advertising.com, inserting the exact keyword into a paid listing improves CTR by 38% on average.  This makes sense because if you list something such as price in your ad, they won’t waste their time, or your money, by clicking if they aren’t interested.

How is Bing’s dynamic insertion different than Google?

While Google and Yahoo use {KeyWord:Your Default Text Here},  Bing uses {keyword}, {param1},{param2}, and {param3}.  With the variety that Bing offers, you can better target ads.  Use as many parameters as possible to make ads unique and targeted.

Can you explain the different types of dynamic text that Bing uses?

1. Keyword {keyword}: puts keyword matched to a query in your ad title, text, display URL, or destination URL, NOT the query
2. Destination URL: upload {param1} as the destination URL for your ad copy, assign each keyword its own landing page
3. Placeholder {param2}, {param3}: insert these into ad title, text, or display URL, then assign a {param2} & {param3} value for each keyword.

How to use dynamic insertion in Bing

Simple! When creating an ad in Bing, click ‘Insert dynamic text’ conveniently located under the ad title, ad text, display URL, and Destination URL boxes.  Then click placeholder {param2}.  If you would like to use more parameters, simply repeat the procedure.

Great, but how do I set my parameters?

Head on over to the keywords tab and scroll down to the table on the bottom.   There, you’ll have the option of filling in a destination URL and two parameters for each keyword.  Word of the wise: keep things consistent. I.E. put an adjective in parameter two and a price in parameter 3.  You definitely don’t want to accidentally create a jumbled ad because you couldn’t remember which keyword had which parameter.

*REMEMBER the same character limits apply.  It can be tricky, because the parameters will each allow up to 70 characters but the ad title still cannot exceed 25 characters and the ad text cannot exceed 70 limits.  If you accidentally exceed these limits, your ad will not show, so be aware of the length of your keywords before utilizing dynamic insertion.

Is there a way to get around the character limit?

Why yes, yes there is.  You can insert default text so that if your parameters are too long for the ad, the default text will be inserted and the ad will still show. . You can define defaults for all types of dynamic text: {keyword:default}, {param1:default}, {param2:default} and {param3:default}. For example, if you want people to see “All roses are on sale and fresh” when a {param2} or {param3} variable causes your ad text to exceed the limits, type your ad text like this: All roses are {param2:on sale} and {param3:fresh}.

Default text only works when the original parameter is too long so, if possible, It might be a good idea to create a few different templates so that you don’t have an ad that looks really short when your keywords are small..  Of Course, that depends if the ad group has long or short keywords that which would allow for such a template.

To be mindful of your keyword lengths, its easy to do a =len() character count in excel to determine the max keyword length in an ad group.  Hint: this formula is also useful for making sure your ads fit in the character count.

All of the words in the ad start with a capital letter, but my keywords are all lowercase.   With dynamic insertion, can I capitalize the first letter of each in my ad?

You can!  If you’ve already uploaded lowercase keywords into your account and they have history, it’s probably not a good idea to edit them in a way that would make them lose history.  The good news is: you can use parameter two to capitalize dynamic text. Here’s how:

In the ads file, click on any cell within the sheet and type the command Ctrl+H. This will bring up the Find/Replace dialog box. Enter in the text you want to replace, in this case, you want to remove “{keyword” and replace it with “{param2”:

Hit “Replace All” to change all matching values in the document. Once all the “{keyword” values are replaced, save this updated ads file for upload. In the keywords file, click on the cell containing your first keyword on row 1 and then hit Shift+Ctrl+? (down arrow) to highlight all text within that column. Copy it and paste it into any empty column at the far right of the sheet. In this example, I’m using column P, starting with row 2:

Now, highlight the cell to the right of your first keyword, as shown above. Type the equals sign (=) in it and then go to the drop down menu shown above where it says “Q2” and look for the option entitled “PROPER”. If you don’t see it, begin typing it in that field and it will appear. Once you have that selected, a dialog box will appear asking you for a value for “Text”. Enter in the location of the first instance of the text you want capitalized. In this example, it’s P2… column P, row 2:

Hit “OK” and you’ll find that in row Q, there is now a copy of the value of P2, only it’s capitalized:

In order to have this formula repeat for all values in column P, simply grab the tiny black box (your pointer will turn into a plus sign when you’re hovering over it) that appears in the lower right hand corner of the highlighted cell of Q2 and drag it all the way down to the last cell that’s adjacent to your last keyword:

Now all you have to do is copy these capitalized keywords (Ctrl+C), select the first empty cell under the Param2 column of your keyword sheet and then use “Paste Values” from the “Paste” drop down menu:

Your capitalized keywords will appear in the Param2 column and should mirror all the terms in your keywords column exactly. Once this is done, delete the 2 columns you used for the PROPER capitalization formula as they’re no longer necessary. You now have your updated keyword sheet ready for upload.

Upload the updated copies of the ads and keywords sheets and now you’ll find that when you search for your ad that all dynamic terms are showing as capitalized.

So now that we’re all comfortable with using Bing’s dynamic keyword insertion, what are you waiting for?  If you have any other questions, leave a comment and I would be more than happy to get back to you.

Start by doing an audit of your ads. If you have been running your campaign for more than a year, you are probably more than due for a little makeover. By audit, I don’t just mean writing a few new ads and pausing any that are underperforming.  I mean a deep dive – look at not only your ads but also those from competitors and other companies in your industry. If you typed in a few of your high traffic keywords, do you have a good idea of the types of messages that would show up along side your ad? If not, it is time to take a step back and look at the big picture.

One of my clients has several divisions of products and PPC campaigns for each. The divisions are all interrelated but each unique in one way or another. I recently went through an exercise where I compared the ads from each of the divisions to look for similarities and differences to find new opportunities. It was interesting when comparing the stats that the division with the highest click through rate had approached their ads completely differently than all the others. In one case all the divisions had used a question in the headline, except one. That division had double the click through rate of the others, resulting in a better quality score and lower cost per click. When you look at things in a silo (by one campaign, ad group or even client) you can see that one ad is out performing the others but if they all have similar headlines (or use a similar “formula” for instance questions in the headlines) you don’t really know how much better it could be doing.  It was an interesting exercise to go through which led me to realize it was time for an audit and makeover to see if I could do better.

After you conduct your audit of what others are doing, compare that to what is in your account. Identify some new areas to try – if all of your headlines are statements, then try a few questions. Do you regularly have sales but don’t have the offer in your ads? Test it out! Before you start writing, think about why someone would choose your brand over another. This shouldn’t be why you want them to buy your product, but think about it from the consumer’s perspective – why should they care? Ads should be benefit driven. Things like product quality, customer service, prices, selection, etc. can be a better sell to a consumer. Think about benefits that you can offer than no one else can, and work that into your ad.

So you know what others are up to, how alike or different your ads are and you have a list of benefits you can use in your ads. NOW you are ready to write! Here are some general tips to help you get started with your new approach.

1. If possible, highlight more than one benefit but don’t over do it. An ad that says “Great products! Best Selection! Free Shipping!” has plenty of benefits but it feels like an ad is a little over the top. There isn’t enough substance to go around it – try to strike a balance and get the consumer interested.

2. When writing a headline, think about it as a billboard. We all see thousands of ads a day – online, driving to work and watching TV. You know what has grabbed your attention, think about why that is and apply the logic to your text ads.  Explain why you are better than the competition but keep it short, sweet and to the point. You get less than a second to make your first impression.

3. Include a call-to-action.  Tell the user what exactly you want them to do. Is it download a free guide, learn more, see a specific product, etc.  The user should understand from your ad what they are going to find on the landing page.

4. Make sure your landing page pays off the ad. If you talk about a specific product, in the ad, that product should be featured on the landing page.  Use landing page best practices to help improve your landing pages and increase conversions.

5. Follow the rules so your ad is approved right away. Keep in mind character counts as well as basic rules like you can only use one exclamation point per ad.  Stay away from things like “most”, “best”, or “biggest” as these claims aren’t allowed. After you load your ads, go back a short while later and check for disapproved ads just to be sure your ad groups are running.

6. Dynamic Keyword Insertion (DKI) can work if used correctly.  While DKI doesn’t always work, if done correctly you can see success. Use it only in very specific ads and with ad groups that are pretty narrow. It is worth testing in a few ad groups to see if it boosts your click-through rate.

A few other tips – in Google, update the ad serving preferences on the settings tab to “rotate” instead of “optimize.” This will allow you to conduct pure A/B test and run both ads evenly. If the setting is on “optimize” Google will automatically run the ad with the higher click-through rate more often as it is the better performer. Your second ad won’t ever have a chance of succeeding.

Also, test many different ads but not too many. Ad groups shouldn’t run more than 3-4 ads at a time unless you have extremely high traffic. The more ads you run, the longer it will take to get enough accurate data to make a solid conclusion on the success of the ad.

It is important to try different things – put a question in the headline, try using only benefits without a call to action, try an offer or discount in the ad, etc. There are many different combinations to test and see what works best. It is very easy to get stuck in a pattern and sometimes it takes a look from the outside to notice what everyone else has been seeing all long. Making a few small changes to your ads could be the difference between a first date and a door in your face.

But before giving you the theory and step by step instructions, there are a few things we should agree on about the kind of bid management we’re going to do:

• ‘Great bids can’t fix a lousy campaign’. This is actually the title of chapter 15 of the ClickEquations eBook (highly recommended) and it’s right on the money. It basically comes down to this: if the relationship between the search queries, your keywords, ads and landing pages isn’t thoughtfully managed or optimized, bidding will not solve your problems.
• CPA might not be the optimal KPI for you. Especially if you sell goods with greatly differing prices or margins, goals like ROAS or ROI are more suitable. This article however, is about reaching a certain CPA. You might also use different CPA’s for different campaigns, that is not a problem with this method.
  If you measure your variable conversion value with the AdWords conversion tracker, then consider the method described by Brad Geddes in his article (Setting Max CPC) to align your bids with your ROI goals.
• The AdWords conversion tracker credits the last keyword (and corresponding ad) that was clicked before the conversion that followed. So when we use the AdWords conversion data, we’re also bidding based upon last click attribution. This might not be optimal, especially if you have a lot of keywords that often assist conversions. Luckily, you can find these keywords in your Search Funnels report and manually credit assisting keywords, if necessary.
  Conversion attribution is a subject worth exploring. Don’t forget to read what Andrew Goodman (Traffick) and Adam Goldberg (ClearSaleing) have to say about it before you join this debate.

• Consider the bids that the discussed method will provide you as suggestions, based on historical data. Your past data might not be predictive of the future, and when we change bids based on your statistics, we assume just that. So if you know that this assumption isn’t valid, then use your own judgment to change bids.
• We are going to change bids on the keyword level. So it will not work for your campaigns on the Display Network or for search keywords that have no conversions (more about these later).
• Conversion rates do not vary by position. The debate is still out on this one, although according to Google it shouldn’t vary much. As always, you should test this for yourself, but I personally believe there are tons of things that influence conversion rate more than ad position.
  And when changing bids based on conversation rates (which we will do), we simply have to assume these will not vary by ad position.
• You track conversions with the AdWords conversion tracker and are bidding manually. These are requirements for the method to work.
  Maybe you use the Conversion Optimizer in some campaigns, needless to say that you can’t change bids manually in these campaigns. And if the conversion optimizer is giving you good results, you shouldn’t want to.
  However, you can still use the method for campaigns that are not using automated bid management.

Theory

Before we go to the how-to section of this article, let me explain the simple theory it is based on:

Your CPA is the result of your CPC and conversion rate.

To calculate your CPA, you multiply your CPC by the number of clicks you need to get a conversion. If a click costs you $0.50 and you need a hundred clicks for a conversion, then your CPA will be $50.

You probably already knew that. And we also know that a lot of factors influence CPC (like quality score) and conversion rate (like your landing page) and that you should always keep optimizing these.

Now let’s turn the equation around: if you know that your target CPA is $40 and you need a hundred clicks for a conversion (i.e. your conversation rate is 1%), how much should you pay for that click?
Exactly, you should pay no more than $0.40 for that click, which happens to be 1% multiplied by $40. Consequently, if your conversion rate is 2% you can pay up to $0.80 to reach your target CPA of $40. And if your conversion rate is 100% you can bid your full CPA for that keyword. Just make sure your conversion tracker isn’t on the landing page instead of the thank you page first.

Hence, to calculate the right bid to reach your CPA, you simply have to multiply the conversion rate of a keyword with its target (or max) CPA.

So we’ll consider conversion rate as a given and CPC as the variable we will change to reach our CPA.

So how do we quickly do this with AdWords Editor and Excel?

1)     Open your account with AdWords Editor, get recent changes and download statistics for the date range you want to use to base your bid decisions on. I can’t tell you which date range is the right one. On the one hand you need enough conversions to be able to make decisions, on the other hand you don’t want to go too far back in time for the data to be representative. So choose a date range you’re comfortable with.

2)     Select the keywords tab on the account level to see all keywords within your account.

3)     Sort your keywords by conversions (make sure you have the conversions column in your view) and select all keywords that have at least 1 conversion:

Campaigns, ad groups and keywords have been blurred on purpose in the screenshots.

4)     Copy this selection.

5)     Paste this selection into a new Excel file. The only columns we need are: Campaign, Ad Group, Keyword, Keyword Type, Max CPC and Conversion Rate (1-per-click, or many-per-click if you prefer to use many-per-click). You can safely remove all other columns.

6)     Now, in an empty column to the right, insert a formula that multiplies the conversion rate with your target (or max) CPA. In the example below the conversion rate of 8.06% (in cell F2) is multiplied by the target CPA of $40

Important: we are changing your Max CPC’s. As you know, this isn’t the same as your actual CPC. So you can enter a number that is slightly higher than your target CPA into the formula, if you feel comfortable doing so.

Furthermore, if you have different CPA’s for different campaigns, it is best to make these changes one campaign at a time (by filtering out all the other campaigns in Excel).

7)     Populate this column by double clicking the fill handle (the skinny plus sign that appears in the bottom right corner) in the cell in which you just entered the formula. Now all your new CPC’s are calculated:

8)     Now that you have your CPC’s that are aligned with your CPA and conversion rate in this column, we just need copy and paste them (as values) back into to the Max CPC column. You can overwrite the existing Max CPC’s in this column.

9)     If you want, you can format the Max CPC column to contain numbers and round off to two decimals. This isn’t necessary for the AdWords Editor import we’re going to do next.
However, AdWords Editor will not round up your CPC’s, but just use the first 2 decimals. So 3.536 will become 3.53. If you want this to become 3.54, format this column first.

10)  Select and copy the Campaign, Ad Group, Keyword, Keyword Type and Max CPC (with your new CPC’s) columns in Excel.

11)  Go back to AdWords Editor and select the Keywords view on the account level.

12)  Click on the ‘Make Multiple Changes’ button and select ‘Add/Update Multiple Keywords’

13)  Now paste the selection you just made in Excel into the Keywords area. Make sure the box ‘My keyword information below includes columns for campaign and ad group names.’ is selected.

14)  When you click the Next button, it should say how many keywords will be updated. If you get the message that new Ad Groups or Campaigns will be created, something went wrong, so make sure you copied all the right columns.
If some keywords get ignored, that’s just because they already had the Max CPC you imported, so that’s fine.

15)  Congratulations, you have now aligned your CPC’s with your CPA and conversion rate!

Before you post these changes consider a few things:

• Some keywords may have gotten a very high Max CPC. Theoretically these CPC’s are justified, but you may not want to to set your bids this high. To review these, just order your keywords by Max CPC in AdWords Editor and manually lower the bids that are too high for your taste.
• You didn’t change the bids of keywords with 0 conversions. This doesn’t mean that these should stay untouched, especially if they accrue a lot of costs.
  You will have to manually adjust or even pause these keywords according to your CPA goals. For example, you could pause all keywords that have cost you (at least) 2 times your CPA and still didn’t convert. And you could lower bids to the first page bid estimates for all keywords that have cost you between 1 and 2 times your CPA and didn’t convert.
  If they are early buying cycle keywords, you might want to set them apart, assign other goals to them and let the Budget Optimizer do the bidding, as Brad Geddes describes in this article.

  These are just suggestions to get you thinking in a methodical way about bid management, feel free to use any limits and rules that work for you.

Use the advanced search and advanced bid changes options in AdWords Editor to quickly find these keywords and make these bid changes or reorganizations.

• You didn’t change the bids in your campaigns on the Display Network (if any). However, you could apply the same logic on the ad group level instead of the keyword level and change bids on the ad group level accordingly.

The title of this article promised you to align your bids within 5 minutes. Maybe the first few times will take you a bit longer, but once you get the hang of it, you will be done in a couple of minutes.

For me personally, it certainly beats reviewing keywords one by one and increasing or decreasing bids based on CPA & position.

If you’re going to try this out for your account, I’d love to hear your experiences! And If you’re not, I’d love to hear why

Guest Blogger Bio: Wijnand Meijer is Sr. Search Advertising Consultant at Netsociety, an online marketing agency based in Amsterdam (the Netherlands) and Brussels (Belgium).
Once a freelance web designer and online copywriter (between 2000 and 2006), he specialized in PPC in 2007 and is currently managing paid search campaigns for clients in the travel, finance and retail sectors.