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TPE #85: reduce wasted ad spend and decrease CPCs (1 simple tactic)

Mar 18, 2024

Read time: 3 minutes

GM — hope you had a fantastic weekend!

In this issue of The PPC Edge, we’ll show you a high-impact tactic we use to significantly reduce wasted ad spend.

We’ve been using this for years and thought it was commonly known and used…

But it turns out most people aren’t using this yet. And that’s because it’s hidden deep inside the Google Ads interface.

We initially shared this tactic in issue #22 of The PPC Edge in December 2022.

And since we are shocked that so many people are still unaware of this powerful tactic, we thought we’d share it again in today’s issue.

We’re talking about Portfolio Bid Strategies with max CPC bid limits.

If you use them correctly, you are guaranteed to reduce wasted ad spend.

We’ll show how to set them up (and common mistakes to avoid), but first let’s look at why it’s so important.

Let’s dive in!

 

Smart Bidding is great, but also has flaws. If you’re not careful, it will overspend like crazy.

The biggest danger of widely adopted automated bid strategies is that Google technically determines all CPC bids.

Smart Bidding as a concept works very well, but if left unrestricted, you will potentially see crazy high CPCs.

Let’s look at an example from our accounts:

In the screenshot above, you can see CPCs of 20-35X the average CPC.

And we’re not alone. Dan Chorlton reported a a CPC of $332.39 (15X higher than his average CPC):

That’s wild!

A quick note on high CPCs with Smart Bidding:

High CPCs aren’t always bad. Google bids more when a conversion is likely to occur. Therefore, it’s ok to see higher CPCs here and there. What’s not right, is to see CPCs of 20-35X your average CPC (especially when the CPC is higher than the CPA lol).

And that’s why you need a portfolio bid strategy with max CPC bid limits: to take back control and reduce wasted ad spend.

Let’s look at what those are and how to set them up effectively.

 

The solution to high CPCs from Smart Bidding: portfolio bid strategies with max CPC bid limits.

Portfolio bid strategies work the same as your normal bid strategies, except you can use them to group multiple campaigns together.

Available portfolio bid strategies:

  • Target CPA
  • Target ROAS
  • Maximize clicks
  • Target Impression Share
  • Maximize conversions (with or without a tCPA)
  • Maximize conversion value (with or without a tROAS)

There is one huge advantage of using portfolio bid strategies over regular bid strategies: you can set up a max CPC bid limit when you have a Target ROAS or Target CPA.

By doing so, you restrict how much Google can bid per click.

We’ll show you how to set this up, and then we’ll dig into some dos and don’ts.

It’s important you read through carefully, because setting up your max CPC bid limits incorrectly can decrease your performance.

 

How to set up portfolio bid strategies with max CPC bid limits (they’re a bit hidden).

  1. Click on ‘tools & settings’
  2. Click on ‘Bid strategies’
  3. Click ‘+’ to create a new portfolio bid strategy
  4. Configure your preferred bid strategy
  5. Click ‘advanced options’
  6. Enter a maximum bid limit
  7. Click save

Let’s go through each step with some screenshots.

 

Step 1 & 2: click on ‘tools & settings’ and ‘bid strategies’.

 

 

Step 3: click the ‘+’ icon to create a new portfolio bid strategy.

And then select your preferred bid strategy.

 

 

Step 4: configure your preferred bid strategy.

Let’s use Target ROAS as an example.

Add a name, campaign(s) and ROAS target.

You can either add one single campaign, or multiple. Which option you choose differs case-by-case but they’re both fine.

Then, click ‘advanced options’. This is where the magic happens.

Step 5 & 6: click ‘advanced options’ and enter a maximum bid limit.

After you click on ‘advanced options’ (see screenshot above), you will see options to enter a minimum and maximum bid limit.

(if you already have a portfolio bid strategy and you want to add/edit your maximum bid limit, just click on your portfolio bid strategy, scroll all the way down to ‘settings’, and then click ‘advanced options’ to enter your bid limit).

Leave the minimum bid limit open. For the maximum bid limit, we suggest a bid limit of 3-5X your average CPC on the campaigns you’re adding the portfolio bid strategy to.

An important note here: there are no hard and fast rules on what your maximum bid limit should be. Keep in mind: if you set the limit too low, you will limit the algorithm.

Usually, 3-5X your average CPC should be enough to give the algorithm enough room to push, while restricting it from bidding crazy high CPCs.

When you determine your maximum bid limits, ALWAYS look at the average CPCs of the campaigns you’re adding the portfolio bid strategy to. Do NOT base your bid limits on average CPCs of your entire account (because then your bids will likely be too low and your performance might suffer).

 

3 Common mistakes to avoid when using portfolio bid strategies with max CPC bid limits

Read through these carefully to prevent mistakes that could negatively impact your performance.

 

Common mistake 1: setting bid limits that are too low.

If your maximum bid limit are too low, your performance will likely suffer because the algorithm can simply not bid enough to get new impressions/clicks. If you average CPC is $1.2, don’t set the bid limit to $1.00. Be smart and set a maximum bid limit that’s at least 3-5X your average CPC. Sometimes higher might even be needed.

 

Common mistake 2: setting bid limits based on account-level average CPC.

Base your maximum bid limits on the average CPC of the campaigns you’re adding to the portfolio bid strategy. That way you ensure your bid limits aren’t set too low.

 

Common mistake 3: setting and forgetting maximum bid limits.

Maximum bid limits on portfolio bid strategies are amazing, but do not set and forget them. Constantly optimize those bids, especially if you see your impressions/clicks decline as a result of setting them too low. In peak seasons or when you have a promotion, you generally want to give the algorithm a bit more room by increasing your CPC limits. The expected conversion rate uplift makes up for the potentially slightly higher CPCs in those periods.

 

Recap and final notes.

Portfolio bid strategies with maximum CPC bid limits are an effective way to reduce wasted ad spend. Analyze your campaigns carefully after setting them up just in case your performance decreases.

If you don’t set your maximum bid limits too low, you should be fine!

Unfortunately, they are not available for Performance Max campaigns, it is what it is :(.

Good luck implementing this advanced and powerful tactic.

See you again next week!

Cheers,

Bob & Miles



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