Adjusting Keyword Bids to Maximize ROI - Google AdWords Learning Center

Objective: See how your maximum cost-per-click (CPC) or maximum cost-per-thousand impressions (CPM) can affect your return on investment (ROI). Learn how to identify related factors and adjust bids to increase your ROI.

The following two factors influence your keyword performance:

How long the keyword has run: If your keyword has only been active for a short period of time, or has only accrued a small number of impressions, clicks, or conversions, you generally won't have enough information to decide if this keyword is performing well for you.
Keyword position: Keywords may perform differently based on their ad's position on the page.

Before you delete any keywords for not performing well, you may wish to consider these factors. You may also wish to edit your bids to experiment with different positions on the page.

The bottom line for any keyword is how much value it generates compared to its cost. To determine the profitability of a keyword, you can track the conversions from that keyword with Google's free conversion tracking tool or another third-party system. For more information, see our Conversion Tracking lesson.

Once you understand the value of each keyword, you can increase that keyword's profitability by adjusting your CPC or CPM bid. For keywords that show a profit, increase the bid to increase exposure and generate more traffic. For keywords that aren't profitable, decrease the bid to lower your costs. Remember that decreasing your CPC or CPM bids could have a drastic impact on the volume of clicks and conversions for that keyword. In some cases, if a term is driving a large volume of conversions, you may decide to hold that term to a lower ROI threshold so as not to sacrifice volume. In some cases it may make sense to lower the bid for a keyword, even if the keyword is profitable. By lowering the bid, you will lower the average amount paid, which may increase the profit margin for that keyword.

Use your Placement Performance Report to find placements where your ads are earning the most clicks. If you find that your ad converts particularly well on a given website, try adding that website to your ad group as a placement, with a higher placement bid to help your ad appear on that site more often.

It's best to adjust your bids in small increments, and then allow the keywords to accrue impressions, clicks and conversions with the new settings. Allow at least 24 hours between changes so you'll have enough performance data to make an informed evaluation. In addition, because the market is always changing, you'll want to re-evaluate your bids regularly.

If a keyword isn't performing well and becomes inactive for search, you can increase your CPC bid to improve its performance. (CPM bidding isn't available for ads targeted to the search network.) If your keyword is inactive for search, we'll list the minimum bid in the keyword status column in your Ad Group Details page. If your keyword is active and underperforming, you can find your minimum bid by:

Creating a Custom Report for minimum bids through your Reports tab.

Editing your keywords' CPCs or URLs in your ad group Details page. (Select the keyword or keywords you'd like to view, and click the Edit Keyword Settings button.)