What Are Bid Adjustments and Why You Should Be Using Them

There are a multitude of ways a paid search campaign can be improved, and the avenue one should choose depends entirely on the desired business outcomes. However, the one metric that I have found to be most powerful is efficiency – knowing who to advertise to and when to do it. This “efficiency” can be significantly improved through the Bid Adjustment tool, which can effectively help target a key demographic to better meet the goals of a given campaign. It can help granularize one’s audience, advertise specifically to each segment, and ultimately eliminate waste by excluding audience members who are unlikely to convert or contribute towards the overall campaign goal.

Before getting into the technicalities of what bid adjustments are and what types are commonly used, I’ll first build some intuition. Everybody is familiar with TV ads – they can be a great building block to understand bid adjustment and how they are beneficial. As a basic example, think about when companies choose to air their ads. Children’s toy companies like Toys ‘R Us (R.I.P) will likely choose to air their ads on Saturday afternoons between cartoons. This is because they know their key demographic – young children – will be engaged and receptive at this time. You would never see a Toys ‘R Us ad at 3:00 am. Companies that primarily target men, like Gillette, will try to air their ads during sporting events. This is because the primary consumers of sports content are males – the demographic these brands are trying to reach. Conceptually, bid adjustments do the same thing in the SEM space.

Defining the different types of bid adjustments 

Per Google Ads Help, a bid adjustment is a percentage increase or decrease in your bids that allows you to show your ads more or less frequently based on where, when, and how people search. A bid adjustment simply means raising or lowering your bid based on when you think it would be more or less valuable for your ad to be seen. There are a few metrics that this “value” is based on which coincide with the different types of bid adjustments.

Location bid adjustments

This does exactly what one would expect – it adjusts bids based on the relative value of a location to a campaign. The location adjustments can be based on country, state within the United States, and, at the most granular level, DMAs (Designated Market Areas). DMAs are regions of the United States used to define television and radio markets. DMAs are centered on large, metropolitan cities and are named as such. They also encompass suburbs and smaller towns further out of the cities.

Let us consider the New England Patriots as another example. The Pats would want to show their ads in New England since someone in that area is more likely to buy a jersey or tickets to a game. To accomplish this goal, they should have a location bid adjustment to bid up searches in this area. Everybody else hates the Patriots with a burning passion and would be unlikely to convert on their ads in any form whatsoever. The Patriots would thus want to bid their ads down in the other 49 states in order to prevent money being wasted on ads that do not generate revenue. All the money that they save from bidding down ads can be used to pump up their footballs. While this example is basic, and a bit extreme, it explains why location bid adjustments can be helpful.

Device bid adjustments

Again, the name gives it away – this type of adjustment modifies bids based on the device that is being used to interact with the ad. Device bid adjustments can be split by device type and not between device types. For example, iPhones and Android phones don’t have separate device mods, they both come under “Mobile devices with full browsers”. Macs and PCs would both go under the same category: “Computers”. For the sake of rounding out the examples, I’ll also say that all tablets, such as iPads and… it’ll come to me… I got nothing sorry. iPads will go under the device category of “Tablets with full browsers”. This is what I meant when I said that device adjustments cannot be implemented for different subsets of the same device.

“So, Smayan, when should I use device bid adjustments?”. Great question. The short answer is to use your data and figure it out. Does your business get a lot of traffic on mobile? This can be the case with low price, high volume items or quick local services. A simple example is that of a restaurant – perhaps the restaurant’s primary source of traffic is mobile impressions that come from people searching on the go, or conversions in the form of a phone call. This restaurant would want to bid up mobile searches in order to get more traffic. Another example could be a car dealership. People might be unlikely to buy an expensive item like a car on their phone or tablet which is why one might consider bidding down mobile ads. However, here it is important to note that mobile ads might drive impressions that result in conversions on computers. This example illustrates that device adjustments can often work in conjunction with one another, and one must be careful when integrating them into the overall campaign.

Time of day bid adjustments

Fairly intuitively – these adjustments allow you to change your bids based on the subjective value of a particular time of day to your business. However, this has limitations. One cannot simply adjust a bid for every minute or every hour of the day. Google lets you make six bid adjustments per day. That’s 42 a week, 180 a month, 2190 a year, and for all you extra curious folks 173,010 over the average human lifespan. This is important because it means that hours need to be grouped, or “bucketed”. Grouping hours in a way that optimizes performance can be very tricky. At a high level, one would want to use time of day adjustments to bid up hours that historically have higher intent-based traffic, which can be measured as conversions. One would also want to bid down hours with low intent-based traffic.

A good example of this would be retail. Retail businesses would want to bid up their ads late in the morning and early in the afternoon because this is a prime time for conversions. Customers searching for retail stores at this time would be the most likely to actually visit the store and convert. Retail locations would want to bid down hours later in the day since the ad spend would not result in conversions since the store would be closed. The impression might be important in acquiring a conversion for the next day which is why the business should not bid their ads down too far, but they should prioritize peak hours. This is a simple example of time of day modifiers in action.

Remarketing adjustments

If a potential customer has already visited the website of a business but did not convert, they get placed on a remarketing list. Remarketing adjustments are most often used to bid up ads for people who did not convert on a previous visit to the website. This is applicable to almost any business and I don’t think it needs an example to illustrate what it represents.

Why bid adjustments are useful

There are simpler bid modifiers to account for age, gender, and other demographic information, but rather than going into detail on those, let’s discuss why bid adjustments are useful. First and foremost, they help increase cost efficiency and performance. By cutting costs in lesser performing conditions and driving conversions in more efficient conditions, the overall performance of campaigns will improve. Bid adjustments help businesses market to their desired audience at a more granular level and prioritize audience members more likely to convert. They can increase efficiency by dictating when and where the ads are seen and by whom. Overall, bid modifiers, if implemented correctly, will greatly improve the performance of an SEM campaign.

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