Harried search engine marketers like myself — and especially those who don’t have the money to pay for agencies or bid management software — love using Google’s Conversion Optimizer to manage their bidding. Conversion Optimizer automatically increases or decreases bids to hit a certain target cost per action (CPA), leaving you free to do other things with your time.
The only problem is that Conversion Optimizer tries to hit that CPA using all the keywords in ad group. This is fine if all keywords have more or less the same conversion rate, but that’s almost never the case. Most ad groups have good keywords with low CPAs, and bad keywords with high CPAs. What this means is that Conversion Optimizer can easily make its CPA target numbers by underbidding good keywords and overbidding bad keywords. That’s the exact opposite of what you want.
I came up with a simple solution for this, which appears to be pretty rare in practice: I simply remove keywords with good CPA and good volume, and give them an ad group of their very own! Conversion Optimizer will then find the ideal bid level for that keyword in isolation. In practice, this means it will spend more on that isolated keyword and get more conversions.
In essence, this is the same reason you separate brand terms from non-brand terms. Brand terms have a low CPA, and if they were mixed in with high-CPA non-brand terms, you could easily be misled into thinking that you’re doing very well when you’re simply seeing a random spike in brand searches.
Now, you can’t use this keyword isolation technique with every keyword. Conversion Optimizer needs to see the historical performance of your bids to do its job, and so it doesn’t work very well with keywords with low volume or low conversion rates. Nevertheless, if you use Conversion Optimizer, you really should put every keyword with significant conversion volume into its own ad group. To let the newly isolated keyword settle into its groove, you can even set the CPA a bit higher for a time, so that Conversion Optimizer has a chance to watch and learn what the equilibrium bid should be.
It’s a simple technique, but it’s been great one for automating bid management for your head terms. Enjoy!