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Adjusting keyword bids will lower your CPA.
Every time a person searches for something on Google, an AdWords auction takes place. All keywords (across all AdWords accounts!) triggered by the query go head-to-head, fighting for the slots at the top of the page. Of all the factors determining the winners, the bid might be the most important.
The higher you bid, the more often you'll appear in search results, but the more you'll pay per click. Finding the right balance is essential.
Note that as you bid more, each click becomes less cost-effective. If you're working with a limited budget, lowering bids can improve your CPA! You might appear in a lower ad position, but more frequently.
You'll usually want to adjust a keyword bid based on its performance relative to your CPA target:
If a keyword is performing better than your CPA target, you should raise its bid to increase volume and the likelihood of conversions.
If a keyword is performing worse than your CPA target, you should decrease its bid to reduce its cost and volume.
Some opinion from Opteo: We tend to see an excessive focus on bids and bid modifiers from account managers. While bids are important, it's easy to get lost in micro-optimisations that don't matter as much as messaging, creatives, landing pages, and general strategy.
How does this improvement work?
Opteo looks at all of your keywords, checking for high-spend keywords with outlying CPA. If a keyword is performing much better than your CPA target, we'll recommend you Increase Bid to boost clicks and hopefully conversions. If a keyword is performing much worse than your CPA target, we'll recommend you Decrease Bid in an attempt to improve the CPA.
You can edit the bid modifier by clicking Adjust. We'll provide you with statistics to inform your decision, including your ads' abs. top impression share and search impression share.
Technical notes :
A keyword must have at least three conversions in the last 60 days to be considered by the algorithm.
If the CPA is really, really bad (3x your target), we'll recommend pausing the keyword instead.
We base recommended bid changes on the difference between the keyword CPA and the target CPA.
Once you've implemented this task for a keyword, we'll stop scanning it for 60 days. This "cooldown period" allows for a new CPA to settle after the bid change.