Google Shopping and The Philosophy of Bidding: When to Bid Up & When to Bid Down

Google Shopping and The Philosophy of Bidding:
When to Bid Up & When to Bid Down

Your bids are one of the most important parts of your Google Shopping Ads campaigns. Your bids play the main role in identifying what queries you show up online and how successful your campaign is.

If you bid too much, you will eventually kill your success. If you bid too little, you may never gain traction.

You don’t have to be an expert to bid right for your campaigns, but you certainly need some strategies, tips, and practice.

3 Things to Consider When Determining Your Bids

There are three things you need to put into consideration when determining your next bids:

  1. Product Price: We see merchants and ecommerce business owners with campaigns where they have the exact same bid for their products. This is not a good idea. You need to adapt your bids to your product price.
  2. Profit Margin: Even though it is important, product price can’t determine how you bid. Another thing you need to consider is your average gross margin. We recommend you to do this as simple as possible. Take a look at the price – cost of products sold. Remember – you are trying to bid smartly.
  3. Conversion Rate: The third thing you want to keep in mind is your average ecommerce conversion rate. Your conversion rate from paid search is going to be lower than your website average.

Considering these numbers is important. Here is the formula to determine your MAX bid.

Sales Price – Cost of Products Sold = Available Profit  

Available Profit X Conversion Rate = Max CPC

Max CPC x (from .4 to .75) = Initial CPC Bid

Once you know your MAX, you can scale your bid down.

Finding the Right Bidding Spot

When you launch your first campaign, you may need to increase your bids a few times, just to get clicks and impressions.

At this point, don’t hesitate to bump your bids, at least for the first few weeks. If you notice that your ads aren’t getting clicks or impressions and you are pretty confident in the quality of your Shopping feed, you need to bid more. Our suggestion is to bump bids slightly, for example, $0.3 – $.10 at a time.

It is not common for a campaign to hit the daily budget, at least not in the beginning stages. At that point, Google will show your PLAs more quietly and watch how users respond. Once your performance metrics start to improve over time, Google will start showing your ads more frequently.

It is essential to set a budget that gives you ad room to improve and grow. Let’s say your average bid is $1 and your daily budget is $5. Google knows that 5 clicks will wipe out your entire budget.

Also, this will make Google less likely to present your ads. If your delivery is set to standard, it means that Google will show your ads throughout the day. If your delivery is set to accelerated it means that Google will show your ads whenever it is possible to show as fast as possible. We recommend you to use accelerated delivery. 

When it comes to low bids vs high bids, everything is relative. Here are some tips to use:

Lower bids usually = longer tail keywords

Lower bids lead to exposure for less competitive and longer tail keywords. Another interesting thing is that usually, the longer queries convert better. With lower bids, your budget expands. In other words, lower beads is equal to more traffic and conversions.

Higher bids for branding, good position, competitive terms, and awareness

The keywords that convert sometimes are the most competitive ones that are more expensive. There are times when you want a good position and exposure for your products. Especially if you are preparing a remarketing campaign or have an email follow up in place.

Seasonal bidding

CPCs are usually driven by competition which means that more competitors bidding will lead to max CPCs. For seasonal products like holiday decorations, plants, back to school supplies, sporting equipment, beach attire, and snow gear, you will need a seasonal bidding strategy. Have your products divided into a way that will allow both increases and decreases in bidding, depending on the current season.

Performance bidding

If you notice that your product is selling, bump the bid, but slightly. By doing so, you can get more exposure for keywords and sell more. If you notice that your product is getting clicks but is not selling, lowered the bid and you may show up for non-buyer and competitive keywords. Don’t forget to check your rivals and your page. If your landing page needs conversion optimization, make the changes. If your price is too high or your competition is offering a promotion, come up with a counteroffer.

Updating Your Google Shopping Bids

Bidding for Google Shopping is an ongoing process. Seasonality, competition, product performance, and business goals are moving targets.

So, how often one should update the bids?

  • 1-3x per week for the first month – If you think that you bid too low, you need to start bumping bids and make changes every few days. Don’t forget to take into consideration that weekends are not right reflections of effectiveness and performance, at least, for some businesses. We recommend you to make adjustments during working days so you can accurately monitor the performance.
  • Weekly for feeds over 50 items – If your shopping campaigns are running successfully, adjust bids on a weekly bases, depending on your overall volume.
  • 1-3x per month for feeds under 50 products – For smaller product selection you should make adjustments 1-3x per month.

Final Words

How do you find a balance when it comes to Google Shopping bids? How do you show up for the right sales, search queries, and generate a return on campaign spend?

Determining the optimal bid is not easy, however, thanks to our tips and advice, you can get started and work toward success and profitability.

We hope that our article can help you find your bidding sweet spot and learn when to bid up and when to bid down.

(You may also want to learn about Google shopping in Australia:

Do you have any questions or comments?

Google Shopping and The Philosophy of Bidding: When to Bid Up & When to Bid Down

Updated on 2019-06-16T22:16:23+00:00, by webmaster.