The Seductive Powers of Bid Modifiers

The introduction of Enhanced Campaigns back in early 2013 gave account managers much to be excited about. One of the coolest additions has been the ability to apply bid modifiers for location, device type and time of day & week. For example, if performance is particularly good on Saturdays, you can set a bid modifier of +10% on that day. By the same token, if users convert at a rate 20% higher in New York City as compared to the rest of the country, you can set a modifier of +20% for that city.

These modifiers are also particularly handy when it comes to device-level bidding. One of the big frustrations with Enhanced Campaigns was the removal of the ability to segment campaigns by device type. Needless to say, users generally behave differently on mobile than they do on desktop and tablet, and SEMs were rightly frustrated about being forced to manage all three from the same campaign. However, bid modifiers still allow you to set separate bids for mobile, or eliminate mobile targeting altogether by applying a bid modifier of -100%.

So, we have the ability to customize our bids for specific areas, times and devices. This provides great flexibility but you need to be careful of one commonly overlooked factor: You’re bidding (at least) twice on the same account elements.

Bidding From Multiple Angles:

Let’s say you set your keyword CPC bid at $2.00, then set a day parting modifier for that campaign of -20% on Saturdays. This means that your $2.00 CPC bid will now be a $1.60 on Saturdays. Then you decide that performance in New York City justifies a location bid modifier of +40% due to much higher than average conversion rates. This $2.00 CPC is now $2.80 in New York City, except on Saturday, when it’s $2.24. Finally, you check your device reports to find that mobile is converting at only half the rate of desktop, so you apply a bid modifier of -50% for mobile devices.

So, you have a $2.00 bid that’s 20% lower on Saturdays, 40% higher in New York City, and 50% lower when triggering an ad on a mobile device. However, when you look at the keyword level CPC, it still says $2.00, but there’s now much more there than meets the eye! Now, multiply this by hundreds if not thousands of CPC bids, bid modifiers for ten different cities, and a different day parting bid for every day of the week. It quickly becomes very hard to keep track of your actual CPCs.

To repeat: your $2.00 CPC is not your CPC bid, at least on Saturdays, in New York City, or on mobile in this example. There are already so many factors that go into the performance that dictates your CPC bids – match types, ad copy, landing pages, and fluctuating quality scores. The addition of bid modifiers only makes matters more complicated by introducing yet another collection of factors.

So, is it even worth it to use them? Absolutely. Theoretically, there’s a good reason why you opted to bid down on Saturdays, up in New York City, and down on mobile. The problem comes when you make these decisions on statistically insignificant amounts of data. Did you wait for enough data to accrue in New York City before deciding that you could reasonably expect those users to convert 40% more frequently than in other cities? Did you drop your Saturday by 20% because, looking back at the last thirty days of data, you had four conversions on Saturday and five on Sunday?

If you set bid modifiers (or any other kind of bid, for that matter) based on too little data, you’re guaranteed to wind up scratching your head the next time you log in to optimize. This is because things won’t necessarily work the way they did before — New York City’s performance might be worse than Los Angeles and mobile might convert better than desktop for the next few weeks.

Conclusion

When performing ongoing bid optimizations, it’s crucial to be organized. The use of additional modifiers can be extremely effective, but it does introduce another set of variables for you to consider when assessing performance. For this reason, be sure that the addition of these variables are really worth it by basing time, location or device level bid modifiers on statistically significant amounts of data. Bid modifiers can be seductive, but if the data isn’t there yet, be patient and keep things simple. They’ll be worth adding when the time comes, but just remember that the more variables you add, the harder it is to understand what’s happening in your account.