1. Establish baseline for comparison

A baseline must be established to optimize bidding amount and Adwords budget, by measuring statistics for ad exposure (It is a factor where an ad is presented to a consumer, and an estimate is made on how many times this exposure is necessary to motivate consumer to buy a product), conversion rates, return of investment and profit.

2. Performance based allocation

In case of multiple campaigns, it is important to identify profitable keywords and make sure the campaign is not lacking funds.  They are the one’s making profit and it will be better to run them all the time. The key is prioritizing and matching budgets and making appropriate re-allocations to optimize budget utilization.

3. Adjusting Keyword bids

It is important to consider cost and trade off in cost per click model for keyword bids by following these strategies:

Strategies for successful keywords (high conversion rate and low cost)

  1. Increasing bid: it will increase cost and position of ad, therefore providing more ad exposure and could potentially increase conversion rate.
  2. Decreasing bid: it will decrease position and increase profit margin by lowering the average amount.

Strategies for unsuccessful keywords (low conversion rate and high cost)

  1. Decreasing bid: It will lower the ad position of the ad and lead to reduction of clicks and costs. This could also release some budget which could be reallocated to high performing keywords.

4. Using ad scheduling

It would be important to identify, for specific times where conversion rates are better. Using  this information and ad scheduling, the price adjustments can be done. This feature automatically increases the bid during a specified time of the day, thereby getting more clicks. Whereas it decreases the bid at time where high position doesn’t influence the profits as required.

Small adjustments are suggested by Google through small increments to measure performance and increase conversion rate. These adjustments can be played around to identify crucial factors and maximize conversion rates and profitability.