TPE #17: maximize profit with Seasonality Bid AdjustmentsNov 14, 2022
Read time: 7 minutes
Black Friday and Christmas are almost here: the most important period for almost every D2C/ecommerce brand.
There are two ways to maximize profit with Google Ads:
- Get maximum revenue on the peak buying moments (maximize growth and scale)
- Prevent overspend on the days after the peak buying moments (maximize efficiency)
In this newsletter, we’ll show you how to maximize growth AND efficiency by carefully managing your bid strategies and leveraging Seasonality Bid Adjustments.
Let’s dive in.
Mismanaging your bid strategies can result in huge overspend and lower return on ad spend
Google’s Smart Bidding algorithm works great. It uses historical data to predict future conversions. It’s really smart.
But here’s the problem: it can’t adapt well to sudden conversion rate changes of more than 30%. And most businesses will have a bigger conversion rate uplift than 30% during Black Friday.
So what happens is the following:
Smart Bidding adapts to the conversion rate uplift AFTER the peak buying moments.
This can cause massive overspend the days after the peak, resulting in lower profits.
In other words, a huge loss.
Let’s look at how to manage your bid strategies effectively.
The 5 phases of The Holiday Season
In order to maximize revenue AND profit between Black Friday and Christmas, there are 5 phases you need to go through:
1: the ramp up
2: the first peak
3: the first danger zone
4: the second peak
5: the second danger zone
Each phase requires a different strategy. Let’s zoom in on every step.
Phase 1: the ramp up
The ramp up is where you start to spend more to acquire as many customers as possible. This is the period leading up to Black Friday.
This is a tricky period: search volumes are increasing, but most people wait until Black Friday to actually purchase something.
The result is a big gap between the moment of the first touchpoint and the actual conversion. You simply need to be patient. It’s especially difficult because you don’t want to overspend too early and hurt your overall ROAS.
But you also don’t want to underspend and hurt your bottom-line revenue.
This is how to manage your campaigns during the ramp up period:
- Be clear on your targets (use the Performance Planner if needed to find your sweet-spot ROAS)
- If performance and budgets allow it, slightly lower your ROAS as you get closer to Black Friday to push harder
It’s impossible for us to say how often and in what increments you should lower your targets. Use as much historical data as possible and use the Performance Planner when in doubt (this could give you an indication - just know that it is never a guarantee).
The increments also depend on your risk-appetite. If you are willing to take more risks, you can lower your targets more than if you are risk-averse.
Don’t forget to review and increase your ROAS targets again after the peak buying moments if necessary.
Not changing your targets is also fine if you don’t want to take too much risk. Just know that this could potentially limit your total traffic and thus revenue later on.
After the ramp up, it’s time to maximize revenue during the first peak.
Let’s take a closer look at how this works.
Phase 2: the first peak
The peaks are the absolute peak buying moments: your customers have credit cards ready to buy your products.
You will likely have multiple peaks during The Holiday Season. The first peak usually lasts from Black Friday until Cyber Monday.
In order to maximize revenue during the peaks, we recommend to use Seasonality Bid Adjustments (SBAs).
SBAs are advanced bid adjustments you can use to inform Google’s Smart Bidding algorithm that you expect an uplift of your conversion rate during a specific period.
The algorithm will use this information to push harder during that time range.
Here’s a hypothetical example of how this would work (we’ll show you how to actually set this up at the bottom of this article):
Let’s say you normally have a conversion rate of 2%. From Black Friday until Cyber Monday, you expect a conversion rate of 3% (an uplift of 50%), so you set up an SBA with a +50% adjustment.
Between the dates you’ve selected, Smart Bidding will push 50% harder than normally, resulting in increased spend, clicks and CPCs. If the conversion rate uplift was correctly predicted, you will also see a big increase of conversion and conversion value (at similar ROAS).
How to calculate your expected conversion rate uplift
You can calculate your expected conversion rate uplift by analyzing last year’s conversion rate trends (just be mindful of how 2021’s data might be inflated because of the pandemic).
We like to take the average conversion rate of the 30-day period leading up to Black Friday and comparing that to the peaks from Black Friday until Cyber Monday.
Your pre-Black Friday conversion rate is 1,5%. Your Black Friday-Cyber Monday conversion rate is 2,1%. This means you expect a 40% uplift. That will be the target for your Seasonality Bid Adjustment.
It’s common to see different conversion rates on Black Friday, the Black Friday Weekend, Cyber Monday and the days after that.
You need to determine whether you need to use different SBAs for those periods, or whether you should go for one target for the entire period.
We can’t tell you what to do - you need to dig into your data to make the best decision for your specific case.
Phase 3: the first danger zone
The danger zones are the periods AFTER the peaks: conversion rates will likely drop and if you aren’t careful, you will overspend.
The danger zone is basically an inverted peak. In some industries, there will be a huge conversion rate drop right after Cyber Monday. Whether this happens or not depends completely on your business, your offer, how long you run promotions etc.
If you expect a conversion rate drop of more than 30% during a few days, you can use a Seasonality Bid Adjustment with a negative target to inform the Smart Bidding algorithm to spend less.
Don’t use negative SBAs lightly. Only use them if you really think there will a huge drop-off after a big peak. Beware that if you use Seasonality Bid Adjustments with a negative target, your spend will go down drastically and so will your conversions.
The first danger zone is the period right after Cyber Monday. Be mindful and check if you need to apply an SBA with a negative target. In most cases, this won’t be necessary. The second danger zone (phase 5) is often more important in this regard.
On to the second peak.
Phase 4: the second peak
The second peak usually occurs before Christmas (particularly the few days before when people buy last-minute gifts).
If you expect a large conversion rate uplift (>30%), consider using another Seasonality Bid Adjustment.
Phase 5: the second danger zone
The second danger zone usually occurs between Christmas and New Year’s Eve. During these periods, overspend typically occurs which can harm your performance.
Just like in the first danger zone, analyze your data and check whether you need to apply SBAs with negative targets on specific days.
The best days to use SBAs with negative targets are usually the days between your order deadline day and Christmas, and then again around New Year’s Eve.
A disclaimer: we’ve seen plenty of cases where these days do get great conversion rates. So again, some caution: this insight doesn’t always apply so analyze your own data to determine if and when you want to use Seasonality Bid Adjustments with negative targets.
How to set up Seasonality Bid Adjustments (practical steps)
Seasonality Bid Adjustments are somewhat hidden inside of Google Ads. Here’s how to set them up:
- Go to tools & settings > bid strategies
- On the left, look for ‘advanced controls’
- Click the ‘+’
- Give an easy to understand name to your SBA
- Set up the correct start and end dates + time
- Select which campaigns you want to apply the SBA to
- Add your conversion rate adjustment (-x% or +x%)
And that’s it! Hard to find, easy to set up.
Advanced tips and tricks for Seasonality Bid Adjustments
A few advanced tips and tricks for SBAs:
Don’t set them up for the entire account but create segments based on campaign types or individual campaigns
This gives you more control. Expecting a 40% uplift on Non-branded Search, but a 50% uplift on Performance Max? Make sure you set up different SBAs.
Be careful which campaigns you want to include
Do you have some campaigns with no expected conversion rate uplift? Then don’t apply your SBAs to these campaigns. Also be mindful whether you want to apply SBAs to Branded Search campaigns (usually not).
It’s better to be conservative than aggressive
We know from experience that it’s often better to be conservative (30-50%), than super aggressive (100%+). However, that completely depends on your case and goals. Just be very mindful of how SBAs will impact your spend.
Even without SBAs, your spend will likely 3-10X on Black Friday compared to the day before. With SBAs, you will spend even more (and potentially also get more revenue, of course).
If your expected conversion rate change is lower than 30%, don’t use SBAs
Smart Bidding is great at adapting to conversion rate changes up to 30%, so if you expect changes that are lower than that, SBAs are not necessary.
Only use SBAs during extreme peaks and valleys
Don’t go overboard with SBAs. Only use them during exceptional moments with large conversion rate changes (positive or negative) like Black Friday, Christmas, Father’s Day etc. (whatever peak moments exist in your specific industry).
If you use SBAs, make sure you have enough daily budget
The last thing you want is campaigns that are limited by budget when you start to push during the peak moments. Increase your daily budgets whenever needed to scale as hard as possible.
- Ramp up your campaigns by decreasing ROAS targets on the weeks leading up to Black Friday
- Use Seasonality Bid Adjustments to maximize revenue on peak buying moments
- Use Seasonality Bid Adjustments with negative targets to prevent overspend when conversion rates are expected to drop significantly
Final disclaimer: all examples are purely hypothetical. Do not copy-paste anything we say. Seasonality Bid Adjustments are an advanced tool that can significantly increase or decrease your daily spend. When used right, they can improve your performnace. when done wrong, they can harm it. Be careful.
Bob & Miles