Debunking and Demustifying Bid Adjustments and Max CPC in Google AdWords

A client recently asked us this question:

“I was looking over our Google AdWords campaign and noticed we are no longer being charged around $X a click but $X more per click. And then on the ad groups some terms are even more per click. Is there a way to bring down the cost per click? Seems like we are hitting our budget way too fast and not getting the calls like we did before we expanded where our ads are being served. Did not realize the cost per click was so much.

 

This article was written to explain our philosophy about the Max Cost Per Click feature, the Bid Adjustments feature, and why it’s treacherous to use them even if you know what you’re doing.

 

Max CPC

Setting a Max CPC means (in a nutshell) that your competitors will outrank you if their Max CPC is higher. In a competitive market your competition will either:

  • Set a Max CPC lower than yours, which is basically just luck on your part. Resulting in your ads outranking theirs.
  • Not set a Max CPC – resulting in an even competition until one of your runs out of your budget, or another factor like their ads don’t run during certain times of the day, week, etc…
  • Or they will manually increase their Max CPC to be higher than yours as they see this with any number of tools on the internet that allow you to see this data.

Currently, there are no tools (that we’re aware of) that notify you when someone’s Max CPC is modified. And considering this could be done at any time of the day, and can be done for every single key word, and every ad, and every combination of these, it’s virtually impossible to track and respond to at all, much less efficiently.

 

What should the Max CPC feature be used for?

Our client seemed to believe it would save them money. This is only true in the sense that they would spend less money for that specific term, but ultimately it doesn’t dictate what is spend monthly, and it’s more likely to decrease their profit and very possibly their return on investment.

So, in our opinion, you should set a max CPC if it’s consuming a substantial percentage of the budget and giving a substantially smaller portion of the return. Then, this would free up funds to be more evenly spread across other terms that may generate equally valuable leads but at a lower cost.

In our case, this client was in the early days of their campaign, so their priority was getting a fast return opposed to maximizing their return.

The steps involved in optimizing your cost per click across the Ad Group, or the Campaign (opposed to per Keyword) demand time (as in weeks and sometimes months) because it’s steps are based on the data you gather after each change.

 

Bid Adjustments

Bid Adjustments, I think, are the dumbest and most unhelpful “feature” Google has ever introduced. As a company, we believe it’s fundamentally flawed and ultimately is only a way to generate more profit for Google and hurts advertisers by wasting more money and complicates marketers and strategists duties dramatically.

 

When should bid adjustments be used?

As you may know, Bid Adjustments allow you to increase your Max CPC by a percentage. 

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