Using AdWords conversion tracking and Google Analytics will allow you to check the profitability of your keywords. If they are not being profitable then you should consider adjusting bids.
For keywords generating a profit (ie. keywords with high conversion rates and low costs), you can increase cost per click (CPC) bids. While this may increase costs, it can also foster a better position and better visibility of the ad, which can potentially result in increased volume of conversions and a better return on investment. However, in some cases, it may be advisable to reduce the bid for a keyword, even if it is profitable. Doing so will reduce the average CPC and probably your volume, but it gives you the possibility to increase the profit margin of the keyword.
For unprofitable keywords (ie. those with a low conversion rate and high costs), you can reduce the auction and thus reduce costs. Lowering the bid is likely to reduce the average CPC of the keyword, its average position, the number of impressions and clicks it receives, and hence the costs involved. This strategy can not only improve your return on investment for poorly performing keywords, but also free in some cases a portion of your budget, that you can then invest in more valuable keywords.
You set the maximum CPA (that is to say the maximum amount you are willing to pay for a sale or lead), and the Conversion Optimizer adjusts your CPC bids in order to achieve the maximum profitable clicks . Some of the main advantages of this tool:
To use the Conversion Optimizer, you need to enable conversion tracking. In addition, your campaign must have received at least 15 conversions in the last 30 days.
Test different budgets and bids, and measure the effectiveness of changes. Testing bids allows you to assess the profitability and ROI of keywords, and testing budgets impacts the visibility of ads.
It is recommendable that you adjust the amounts gradually to allow keywords to record conversion statistics and performance data with the new settings. Wait at least a few days between each change in order to have enough performance data to evaluate results. In addition, costs and daily sales can increase and decrease according to the normal fluctuations related to search volumes. Do not hesitate to regularly review bids and budgets to make sure that they are truly effective.
By performing tests and measurements, you’ll be able to find the ideal range that will allow you to more effectively reach your advertising goals.