How to use device bid adjustments, straight from Google

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It’s been an exciting year for AdWords. New attribution models, longer ads, responsive ads and a long-awaited announcement that got lots of applause back at May’s Google Performance Summit Keynote: device bid adjustments.

Truthfully, it was hard for me not to applaud when we made the decision to add device bid adjustments. The online world has evolved so much since 2013 that these adjustments have become a necessity. People are still moving seamlessly among multiple devices, but for many, mobile has undoubtedly become the top priority.

Translating excitement about a new feature into execution can be tricky business though. I’m sure you all are thinking about how to take advantage of bids specific to mobile, tablet and desktop. But what is Google’s take on what device bid adjustments will mean for you and your account?

(Quick aside: This is a great opportunity to bid smarter, but this isn’t the type of change that you have to react to. If you sit on your hands, your account won’t break or anything.)

Keep consolidated campaigns

I know it’s tempting to want to split out mobile-, tablet- and desktop-specific campaigns in this new world. But I don’t think you should do that. Duplicating or even triplicating your campaigns creates so much additional work for your team.

Ask yourself if the benefits of splitting out new campaigns will outweigh the costs. Most of the perceived benefits of device-specific campaigns, such as keyword-level bids and device-specific creatives, can largely be achieved using existing features. For example, by organizing similar performing keywords into the same ad groups (or splitting them out when it’s warranted), you can use ad group-level device bid adjustments to achieve highly optimized performance. You can also use ad customizers to create device-specific messaging.

On the other hand, there are many drawbacks:

  • (Potential) loss of consistent keyword coverage across all devices
  • Needing to update two or three sets of ads and ad tests instead of one
  • Implementing ad extensions for all campaigns
  • Adding negative keywords to all three campaigns
  • Making all of your main bid changes across three different campaigns

Beyond that, any new optimization or test may have to be repeated across multiple device-specific campaigns. And as your campaigns grow, the work will grow, and so will the risk of performance decline due to inconsistent coverage in extensions, keywords and everything else. While all of these drawbacks can be overcome with extra diligence and man-hours, the real question is this: Is the work you’re adding going to outweigh any theoretical performance benefits?

Use AdWords Smart Bidding (formerly known as automated bidding)

Speaking of efficient time use, I think this is a great time to ask yourself if you could change your approach to bidding entirely. AdWords Smart Bidding (AdWords’ automated, auction-time bidding options) looks at device, along with a whole bunch of other factors, directly at the time of each auction. It saves you a ton of time, and more importantly, it can help you improve performance by setting bids that are better matched to a user’s context in every auction.

I know there are some of you who tried automated bidding years ago with some not-so-great results and that you’ve steered clear ever since. If you’re one of those skeptics, use this opportunity to give automated bidding another shot. We’ve improved our bidding algorithms over the years, adding new contextual signals and raising the accuracy of our models to get you more conversions within your performance targets.

And here’s the best part about it: Drafts and experiments gives you the ability to run a pure A/B test so that the numbers can do the talking. Here’s a guide to setting up just such a test.

Something that’s particularly exciting: When we announced Smart Bidding, we also announced that you’ll soon be able to set device performance targets with Target CPA bidding. If users who convert on different devices have different values for you, you’ll be able to use Smart Bidding with separate CPA goals by device. It’s cool stuff.

Now I’m going to talk about how to set bid adjustments manually next, but I really don’t think you need to worry about that in most cases. Keep consolidated campaigns and use automated bidding. Adapting to device-specific bidding really can (and in most cases, should) be as easy as that.

Manually setting device bid adjustments

The interaction of bids with adjustments can be a confusing process (as Fred Vallaeys explained well earlier this month). I have had a whole bunch of conversations about this internally, and here’s what I think is the best process for setting your device bid adjustments.

Start the process with your most specific bids (like keyword-level bids), trying to hit your desired performance goals at the aggregate level of your account (or bidding portfolio) across all devices. Basically, change your bids at the keyword level, using non-segmented data from the keyword tab. The key here is to have an acceptable return on investment while still getting as much volume as possible. Efficiency is not the same thing as profit, so fully consider what your performance goals should be.

Think about it like this: if mobile is performing significantly better than your campaign’s average CPA, and tablet is performing significantly worse, it probably makes sense to increase bids on mobile and desktop, while decreasing bids on tablet. By bringing each segment’s performance closer to the overall average, your campaign should become more efficient and yield more total conversions.

One way to do this is to calculate bid adjustment changes by dividing the total CPA for the campaign by the CPA of a specific segment of that campaign. For example, for mobile bid adjustments you can divide your total campaign CPA by mobile CPA. You can then apply that figure to the existing mobile bid adjustment. It’s very important to note that this is an ongoing process; after applying the new bid adjustments you should monitor your campaign’s performance and make further changes as needed to base bids or bid adjustments.

This can be done at the ad group or campaign level, depending on what device-level performance differences you see within your campaigns. In many cases, campaign level gets the job done and gives you enough conversion data to make decisions with, but that may not always be true.

This approach is similar to what most advertisers have long used for mobile, geo, time of day and audience bid adjustments, and I think the same approach will work for your device adjustments.

I recognize that this all can sound a bit confusing, so an example is in order.

How I’d set my bid adjustments

Start with total campaign performance. This is your reported data from AdWords.

Reported Conv. Cost Reported CPA
TOTAL 18 $200 $11.11

 

Then segment performance by device.

Cost Reported Conv. Reported CPA
Mobile $60 5 $12.00
Desktop $90 10 $9.00
Tablet $50 3 $16.67
TOTAL $200 18 $11.11

In the past, this might have been where you stopped and calculated your device bid adjustments. Mobile had a high CPA, so decrease the bid to try to improve performance, then move on to something else.

But that could be a huge mistake, considering the value of mobile in today’s world. Go a few steps further and think about the full value of mobile (and desktop and tablet) beyond traditional online conversions. For example, store visits, branding, app engagement, calls and cross-device activity can all be tracked in AdWords, so use those numbers plus what you know from your internal metrics.

This number that accounts for offline activity is what I call “full value conversions.” It’s going to change what your performance looks like and how your should set your targets based on your own familiarity with your customers.

In this example, I feel pretty confident that mobile drives more valuable activity than what I can measure directly in AdWords. I’m going to set “full value conversions” to account for my mobile performance and then re-calculate my CPA, both for mobile and overall. (If you decide to go with automated bidding, this is where you’d set the right device performance targets.)

Cost Reported Conv. Full Value Conv. Full Value CPA
Mobile $60 5 8 $7.50
Desktop $90 10 10 $9.00
Tablet $50 3 3 $16.67
TOTAL $200 18 21 $9.52

When adjusting my bids, I want to equalize my device-level performance relative to my total, aggregate performance. Here’s what that calculation actually looks like:

Device bid adjustment ratio = (Total full value CPA/Device full value CPA)

Then, to get that number to a percentage:

Device bid adjustment change = (Device bid adjustment ratio – 1) * 100

Cost Reported Conv. Full Value Conv. Full Value CPA Bid Adj. Change
Mobile $60 5 8 $7.50 +27%
Desktop $90 10 10 $9.00 +6%
Tablet $50 3 3 $16.67 -43%
TOTAL $200 18 21 $9.52

 

The key takeaway here is that in many cases, each of your three device bid adjustments is not zero. (The exception would be if you have a device that performs about the same as your aggregate.)

Something else worth mentioning, I think. If this campaign had default bid adjustments of 0% for all three devices, you would apply +27%, +6% and -43% to the mobile, desktop and tablet bid adjustments respectively. It’s straightforward the first time through, then you’ll need to change your modifiers at the conclusion of this process each time in the future. For example, if this campaign had a +50% adjustment in place for mobile, meaning your mobile bids are 150% of your base bids, you would then multiply that 150% figure by 27% to get a further increase of 41%, resulting in a new mobile bid adjustment of +91% (50% + 41%). That’s why I labeled that far right column as a “bid adjustment change” instead of a straight up “bid adjustment.”

It may seem a bit counterintuitive, but anchoring your base keyword-level bid to one device gets complicated. Rather than use a single bid adjustment, you instead need to change your keyword bids for your base device — which means that you’ll also need to re-update your other two device bid adjustments.

In the example above, if mobile were the base device type (with a bid adjustment always set to zero percent), then you’d first need to increase your keyword bids to achieve the desired goal, then re-compute your desktop and tablet bid adjustments. It’s easier to just use all three device bid adjustments to optimize performance across devices, compared to using a combination of keyword bid changes and bid adjustments.

To summarize my recommendation: Optimize your performance in aggregate across all devices, then use device bid adjustments to drive performance across devices that’s in line with your overall goals.

Remember that as you go through this process, you can take a look at the bid simulator to see how changes to your bids or automated bidding targets will affect your conversion volume. Hitting a CPA target becomes less imperative when a slight bid increase gets you to the top slot and a big bump in conversions. Be thoughtful long term about that balance between efficiency and volume.

The final thing I’ll say is this: As you put positive bid adjustments in place, keep an eye out for diminishing returns. In some situations you may already be participating in most relevant auctions in a prominent position, so increasing bids may not lead to significant increases in clicks or conversions. Check out your impression share or your bid simulators to get a sense of where you might run into those types of situations in your account.

Of course, you could also save yourself all of this work and use automated bidding!

Conclusion

I totally understand the excitement about device bid adjustments, but I think that your day-to-day campaign management might end up not changing that much. You have two additional knobs to tune performance by device, and those knobs now have a wider range to make adjustments.

AdWords generally works better with consolidated campaigns, so it’s more than likely that you already have a system in place to succeed with device bid adjustments. If you have any remaining questions about device bid adjustments, there’s going to be a live Q&A with the product manager during a Hangout on Air in early August.

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