PPC Essentials Part 7: Bidding Strategies and Their Impact on ROI

"Hello and welcome back to another episode of the Collective Clicks podcast. This is your host Brandon Bateman, and today I'm going to be joined by Garrett Craigan, our Director of Paid Media at Bateman Collective. We're going to be talking all about bids, which are one of the main foundational elements of Google Ads. This is episode number seven out of eight of PPC Essentials. How are you doing today, Garrett?"

"Doing pretty good. How are you?"

"Hey, fantastic. Thank you. Just welcoming in the sun and the 70-degree weather and happiness back into our lives. All that stuff that happens with the spring."

"That's right. Thank goodness."

"Yeah, I'm super excited to talk about our topic today, which is specifically bids. For anybody who's been following along, you know that last week we talked about bid strategies, which is a foundation for bids. Although I think it is so commonly said, not just in the real estate investing world but in so many other industries, anywhere that you can find somebody that manages Google Ads, I think it's said that this bid strategy works better than that bid strategy or whatever the case is. But the piece that's missing from that is that you have to actually work these bid strategies, and you could have a strategy that's awesome, but if you don't know how to manage it properly, then you're going to have some other strategy outperform you. I found that's the case a lot with these like heavily automated strategies. Some of the people that really, really lean on those, they just don't know how to run bids."

"Yeah, and basically if you do, then you can do better with some other strategies. Do you have any comments on that?"

"Yeah, I think it's less about what bidding tactic you're using but how you use those bids to dictate your volume, dictate your cost per lead. And as long as you're making decisions based on business objectives, in general, it'll work out better than if you're basing it off of just what's in the platform or based on gut."

"Yeah, absolutely. So a place that I think would be good to start with this is just to lay the foundation of what we're going to be talking about. I think that for the most part, we're going to be talking about the target CPA bid strategy in Google, just because that's the strategy that we're using most commonly. I know we're pretty excited about t-COS and maximize conversions value, and we have some clients doing well with maximize conversions and cost per click bidding and stuff, but really, when it comes to non-branded stuff, it really is TCPA that seems to be the biggest winner right now. And there's some specific things that need to be done from a bidding standpoint there that I think we should talk about."

"One good place to start is with maybe a little bit of a foundation of what it is that we're talking about on a more conceptual level. I see people making a lot of mistakes when it comes to how they bid. A really common one is that what people naturally want to do is they just want to bid really high because they think they're going to get better leads if they bid high. It's also pretty common to bid really low because you're cheap. You just think you can get... you don't want to give Google any more leash than they need or maybe not even give them the leash that they need."

"I guess I've seen people tend to fall into two camps. Basically, Camp number one is it's all about value, and what I mean by that is you're saying, 'I don't care what it costs, I just want the click that's going to turn into a deal.' And then the other camp is that it's all about volume and cost, and they try to minimize the cost. But the reality of the situation is that there's really two things that make up what you should... they make up return on investment, right? There's two metrics: there's revenue per lead and cost per lead."

"And really, that's what bidding comes down to. It's getting the bids in the right place so that you can have your cost per lead be proportionate properly to your revenue per lead. If you focus just on the cost per lead, then what's going to happen is you end up with perhaps a really low revenue per lead because the things that you do to drive that cost down, they hurt your lead quality. But if you focus just on revenue per lead, you have the underlying assumption that your competitors aren't."

"Because a lot of people say, 'I don't care what it costs, I just want that lead,' but you do care what it costs because there's a certain number where it's not worth that anymore. And like, you can't just make it so you only buy leads that are going to close or something like that, right? There's just a... like some of the things that generate the most qualified leads, they tend to be slightly more qualified or maybe even majorly more qualified, but majorly more qualified might be 40%, right? Where it's not like the other ones are useless. Do you have any thoughts on that dynamic that makes up a return on investment?"

"Yeah, I think it's like you were saying. It's important that you take into account not just 'I want to make my leads as cheap as possible' or 'I want as many leads as possible regardless of how much they cost.' If you can understand where the best margin comes from, that's where you can afford to bid higher. And in those areas where there's less of a chance of a good lead coming through, but there's still some in that mix that are quality, then you can bid lower and be assured that when there is a lead that does come through, its cost is still in a place where that margin holds true."

"I think probably the easiest comparison for Google Ads bids is it's just like wholesaling real estate. If you're wholesaling real estate, you could... there's different factors that tell you what a house is worth, right? It could be the number of bedrooms, the number of square feet, what location it's in, all that kind of stuff. But I can tell you a strategy that does not work for wholesaling real estate is either saying, 'I know I can sell houses for tons of money, so I'm going to go into a market and find the most valuable houses that I can sell for the most. That's how I'm going to make money.' But that's what some people do with PPC."

"On the other hand, you have people that... you could say with wholesaling real estate, 'I just want to get the cheapest possible houses, and that's how I'm going to make money.' But you and I both know that some houses are cheap, but they're worth even less than what they cost, right?"

"What really makes the value in wholesaling real estate is the discrepancy between the cost and the value. It's the fact that you can buy at a discount, not necessarily at a high price or a low price. And bidding on Google Ads is exactly the same. You have to identify what are the leads that are worth a lot and we're willing to pay a lot, or they're worth very little but we're able to get them dirt cheap. The whole point is you want to basically bid at a discount. You want to do the equivalent of low-balling Google, and when you come in with those low bids, sometimes you win them, and that's how you create the most value."

"Yeah, and so the whole... the key that I think goes unnoticed in PPC is that everyone has the ability to bid on the same searches. Everyone is playing in the same system. So the winners are the marketers that are able to identify those advantages that others don't, and that can come through your keyword, that can come through your bids, that can come through your ad copy, or even through how effective your acquisitions team is once those leads come through. But it all comes down to identifying where you can outperform people on what looks like a level playing field."

"And I guess what we want to do on this episode is help you to find ways to make that playing field skewed in your favor a bit more."

"Yeah, absolutely. So let's talk about the first common issue when it comes to bids, and that is probably the most common one that I see honestly, and it's that you put your bids too high. What do you think are some things that drive people to put their bids higher than they need to be?"

Certainly. Here's the next part of the transcript, corrected and formatted:

"I think people bid too high for a few reasons. One is they take the auction as a battle of who's the Big Man on Campus, when that's not really how it operates. The big man often is losing money. You think he's winning, but he's probably overpaying. And then the other reason why people bid too high is they don't understand their unit economics behind the scenes, and so they think that they can make this cost per lead work when in reality they can't. So I think it comes from one, a lack of understanding of how the platform works, and two, a lack of understanding of how those leads perform after they're captured."

"I think some of it could just come from understanding what your goals are as an advertiser, because where I've seen people go wrong with this is their goal is to be at the top of Google. And if that's your goal, you can get there, but it's going to cost you a ton of money to get there. I have clients reach out to us sometimes where they send like a screenshot and they're like, 'I searched this keyword. Why didn't I show up?' or something like that. And the answer is someone bid higher than you. So then they say, 'Can we bid more?' The answer is probably yes, but should you bid more? Because you're spending your full budget and we're getting great clicks at a great discount and the return on investment's good. So why would we overpay for something just so we can show up in one arbitrary place that makes your ego feel nice? It just doesn't make financial sense."

"I think everything has its point where it does have value though. This is why there's diminishing returns with scale. People talk about it all the time, where you have a diminishing marginal return as you scale your advertising budget. A lot of people don't understand that the reason that happens is because as you scale your budget, you actually have to bid higher because those clicks... think of it like your... there's a target, right? And your budget's going to take up a certain amount of the target, and if you have just a small budget, you really just want to be in the bullseye of that target. These are like the absolute most discounted and qualified clicks that you can find in a market."

"As you start to scale your budget more, now you have to go a few rings out, potentially, or maybe even a few rings further out than that because you can't spend all your budget just in the bullseye. So now you have to pay a little bit more than you want to for some stuff, or you have to buy some stuff that you might not have bought before. And that's what can degrade your lead quality and potentially your lead volume as you start to scale your budgets."

"And so maybe at some point that does make sense. That extra lead that you could buy for $400 when your average cost per lead is $200 with a certain amount of budget, it doesn't make sense, but it just might not make sense if you have a small budget. And pushing yourself and trying to optimize for impression share when really what you're trying to care about is return on investment, I think can lead you down that road of just over-bidding."

"And then what you end up doing is you overpay for some of those clicks, but you end up having to miss out on others that are a much better opportunity because you have a finite budget."

"Yep, exactly. So how do you know if you're over-bidding?"

"Great question. Where I would look to see if I'm bidding in the right... at the right level is I would look at what's our cost per click and what's our cost per lead. And that's probably where I would look first. Like if I'm seeing that my cost per lead is too high, the easiest place to bring that down is to bid lower in an intentional way. I wouldn't bid lower across the board. I would bid on the ad groups or the keywords where I'm seeing the biggest... like misses from where I need that cost per lead to be."

"And then the other area that I would look at is like, how's our budget pacing? Are we like way overspending relative to where we're comfortable? If we are, we're probably over-bidding. And then... and that's one other area of if we're overspending, let's pull back a little bit."

"I think it's worth... I think you're trying to keep it a little bit higher level, but I want to give somebody some like really actionable information that they can look in their account for. Because there's some metrics that kind of surround bidding that I think are really commonly misunderstood because Google kind of has this rhetoric that they want you to understand about it, and everybody just followed it. And I feel like I'm the only person like screaming in the wilderness saying you should look at this, and everybody's just doing what Google wants them to do."

"And the metrics I'm specifically referring to here... if anybody's ever looked at your Google Ads account and you see this big like orange or red thing that says 'limited by budget,' that shows up... that's a pretty clear signal. But there... there's some metrics behind it. The first one's impression share, which we talked about before. It's basically the percentage of the time that you're showing up when you're eligible. Then there's this other thing that causes limitation by budget where it says 'impression share loss to budget,' and it's basically what percentage of the time are you not showing up because your budget has cut you off."

"So the way that Google wants us to understand that is we need to raise our budgets because our budgets are not sufficient for what we're trying to accomplish right now. And that's a viable option to... to address that, but the thing is, it's arbitrary based on where you put your bids. So what this is really saying is your bids and your budget are incompatible. You have bids that are high and a budget that is low, and therefore you should have a budget that's higher or you should have bids that are lower. You just shouldn't have that budget with those bids."

"So what Google wants us to do always is raise the budget, but the other option is you could bid lower. And I see this all the time in our audits that we're looking at this account and let's just say it's spending $110,000. And I don't want to bore everyone with all the math and stuff like that, but we might find that they have... like everybody knows you get a diminishing return as you spend more money, but they might have the diminished return of a company that spends $100,000 a month because they're bidding as if they spend $100,000 a month, yet they only have $10,000 a month to spend."

"So they're getting cut off, and what that does is it means that you're just... you have a way higher cost per lead than you could have. Even if the number makes sense for you, right? Let's just say for the return on investment you need to pay 200 bucks a lead and you're at 200, a lot of people would say okay, we're good. But what if it could be 100? You could have double the return on investment, and I think that's totally worth doing, right?"

"So anyways, I think the... is there anything you'd add to the dynamic between those metrics, the impression share and the lost impression share to budget?"

"Yeah, I think a good rule of thumb is if your cost per lead is too high and that impression share loss from budget is also high, that means you're probably bidding too high. If the cost per lead is in a good place and you're losing volume due to budget, that's where I actually would just bump up budget because we're seeing that the only reason we lose volume is because there just isn't enough spend available to reach the full audience that's already being reached at an efficient place. So I think those two metrics can help you have a budget problem or if you have a bids problem."

"Yeah, absolutely. And as you can imagine, this gets pretty strategic, right? There's a bunch of different ways to handle it because what you're talking about is maximizing your value or your volume that you can drive with your bids in a specific place where you get a certain return on investment. Which, let's just say you need more leads in your business, that's absolutely the way to go. But what if your team's too busy and you can't handle more leads? Then you might just want to go even lower with bids."

"So the important thing to remember is it means that the bids and the budget are incompatible, and how you approach that... it could be that you scale the budget if your return on investment's good. What most people want to do there is scale their budget, and I think that makes a ton of sense. But if the return on investment's not good, that's only going to make it basically the same but at a higher volume, right? And the same at a higher volume, I would not call a move to make if you don't have a good return on investment."

"So yeah, it... it goes both ways. However, I think the one thing you shouldn't do is just completely ignore it forever, which is what we find like 95% of people do. It's oh, you're just over-bidding a ton. I'm just going to leave that there for the next year and not actually do anything about it. So now I'm getting the diminishing return of a company that has a much larger budget than I have, yet I have the volume of a company that has a smaller budget."

"So if you think about it like when you scale, what's the upside and what's the downside? The upside is you have volume, the downside is you lose efficiency. Whereas if you get smaller, you get more efficiency, less volume. But if you bid too high, you get less efficiency and less volume, and it's just the worst of both worlds. Just doesn't make any sense."

"All right, so that's bidding too high. Let's talk a little bit about the flip side of that. Like, how do you know if you're bidding too low?"

"Bidding too low, I would look... the key metric that I would look for, I guess this is two. The first one, like we talked about, is your cost per lead. And then the other one is going to be your impression share due to rank. And rank is a black box with Google, but in general, it's going to be a pretty good... a pretty good metric to indicate your bid... like level."

"So when there's a high impression share loss due to rank, that means that you are losing impressions due to not bidding as aggressively or not having as good of an ad rank as other advertisers in your space. An ad rank is composed of things like your ad relevance, your page experience, and your bids. But in... in this case, in this podcast, let's just say it's mostly bids. And so... which if you're maximizing the rest, is... you're probably safe. It's not like you see that you have lost due to rank and then you suddenly... huh, I should write better ads or I should make a good landing page, right? Like, you should already have... regardless of this, trying to maximize those things."

"Definitely. And so if you're at a good cost per lead but you're losing a lot of rank-tied volume, then that's probably a bid issue. In addition, if you're underspending your budget, that's probably also due to your bids being too low."

"Yeah, that's like the dead giveaway, right?"

"Yeah, because Google will just go up to whatever constraint it can. So you could have a $10,000 a month budget. One way to explain this is, let's just say you had an infinite budget in Google. With your bids at a certain place, there's a certain amount of money that you would end up spending even if you had no cap on your budget. And if that number is, let's just say, 50 grand, and your budget's 10 grand, that's called limited by budget and over-bidding. If that number is two grand and your budget's 10 grand, then you're going to only spend two grand and you're underspending, right?"

"So really, where things are optimal is you just have to somehow know the exact number to put the bid at to where even if you had no budget, you would end up spending your budget. Because that's like the most efficient place to be. It's just easier in theory than it is in practice. But just to like, boil... boil this down to the brass tacks, that's what it looks like."

"So if you are underspending, what do you... or if you are under-bidding, what do you do?"

"What I do is I look at what we could afford to pay for a lead or for a click, depending on how you're bidding, and try to set it as close to that maximum as possible to get things back in... in a place where you are maximizing that volume."

"One other thing I would say too is to be careful if you're going to make these decisions just based on the loss due to rank. Loss due to rank, it's like the metric that summarizes what we talked about before where you search and you don't see your ad and you think that something's wrong. That's actually a metric that shows you how often that's actually happening, which is really insightful. But there's situations... we have clients that have a 90% loss to... to rank, which is super high, and it's completely fine because maybe they advertise nationally or something like that. And with their budget, they're... if they were to... if they were to get 50% impression share with their budget, it'd be impossible, right? They'd have to be spending $500,000 a month to get there."

"So a lot of loss due to rank is like a really natural thing. It just means that you're bidding really aggressively low. But key sign there is, do you have lost due to rank and are you under... under budget also? Because if you're hitting your budget and you've lost due to rank, then who cares? But if you are under budget and you have lost due to rank, then it shows that if you could turn that lost due to rank into impression share, then you can scale. And that has a lot of value."

"What else do people do wrong that we're seeing in our audits when it comes to bidding?"

"I think the other factor is how often to adjust bids. I see people make two very different errors when it comes to bidding change frequency. It's either they're changing it daily, hourly, or way too often given their budget, or they're just not as reactive as they need to be to changing numbers, and they're losing out on efficiency or volume because they aren't making those changes as frequently as they need to."

"Yeah, I think the way I would... summarize it, and this is true for most things in Google Ads, you have to change things as frequently as you possibly can with sufficient data to make those changes. The problem is people who do it really frequently, they don't have data to be able to make those decisions. But I just did an audit of an account where I saw a year and a half with zero changes to bids, all the while the limitation by budget was going up and up, and the whatever company was managing it just didn't... didn't never look at it or care."

"One thing I really see that's common is if bids need to be raised, then companies tend to raise them. But if they need to be lowered, they tend to not lower them. This is just... I'm not trying to throw shade at our competitors or anything, but it's... I think it's a natural thing that arises from like the lack of knowledge that companies in general have about Google Ads."

"So if you... let's just say an agency ends with spending half the budget, they're going to get an angry call from the client saying, 'Why did you only spend half my budget?' And it's going to cause them to raise the bids. Let's just say they had a 20% higher cost per lead than they technically could have gotten because they over-bid. No client calls you up and says, 'Hey, I could have gotten a 20% lower cost per lead based on all these metrics that I see in the account. However, we were over-bidding, and I noticed that there's a limitation by budget, and I'm upset about that.' Right? Nobody ever says that."

"So agencies are incentivized to just always have bids too high because what happens when you try to play really close to the line of getting them... because really, the game is how low can we get bids without it being too low given our certain budget? But when you start to play close to that line, you end up under budget sometimes. So I think a lot of agencies just... they really clear but they lose efficiency because of it."

"So maybe it'd be helpful for anybody that does manage their own PPC if you could just explain... like in... in short terms... like what our happy medium is there. What do we... what frequency do we use for adjusting bids? How do we adjust those bids?"

"Yeah, so we base our bid schedule based on the number of clicks that an account gets in a given time period. So what we say is that if an account gets over, I believe it's 150 clicks in a week, we make... uh, bid changes every three... three or four days. Then if they're under that, we in general make... make those changes weekly. With the caveat that we... that we don't make changes as if there's been a major change in the account like a budget change, like launching a new campaign. Those kinds of things can impact the data that we're looking for to assess where bids need to be. And so we wait a little bit longer to make those bid changes until there's enough data post-major change to assess where those bids need to be given the new landscape of the account."

"Yeah, there it is. If anybody wants to copy the exact process, that's what it is. And then how much we change the bids is all based on a formula of these different metrics, and we track if we change bids this much, how much of an impact does it have on those metrics? And we try to get better over time at changing it through... right amount. Although it's worth saying this is a different game every day, like sometimes you raise bids a little bit and it just does crazy things to the volume, and sometimes it makes no difference. And it's... so that's where we also in general ask for... ask our clients for a little bit of grace on the amount of spend because we try to push the efficiency as high as possible."

"But we say something like 75 to 100% of your budget being spent is really typical because you'll have some days where we predicted that there's going to be a certain amount of search volume, we predict that there's going to be a certain amount of competition, and all based on that, we're going to bid this exact amount and it's going to be perfectly efficient. And then the competition's higher than expected or the search volume lower than expected, and what happens is you end up under budget. But the next day is a new day, and you can set your bids differently."

"And anyways, with some days that are lower volume, it's really normal to be at least a little bit under budget, but you gain a lot of efficiency. So I think most people would be better off setting, for example, a $15,000 budget and then averaging 13, then they would setting a $13,000 budget but having to hit it and therefore they... they have to over-bid and end up with a higher cost per lead at the end of the day."

"All right, so that's the way all of these episodes have been structured is we talk about what do people do wrong and how do you do it better. I think if you just do bid changes with the right frequency and you understand trying to get them as low as you can without going under on spend, I think you're good. One caveat for that is I've seen people destroy their results on accident by doing that. You really need the right foundation beforehand. How do I... how do I explain this?"

"Sometimes in a Google Ads account, you have some activities in the account that are generating waste, and then you have other activities that are generating good leads at a good price. And the percentage between the waste and the good stuff is a certain thing, like maybe 90% of the budget's going towards good things and 10% is going to waste. But then when you change your bids, even though the bad stuff and the good stuff that were both there from before, nothing's really changed there, it changes the dynamic between them. So now you're spending 90% on the bad stuff and you're spending 10% on the good stuff. And really all it does is it just exposes a weakness that you already had by changing the amount exposes a weakness that you already had by changing the amount of volume that goes towards it. So it's not really bidding that's the problem, but people think it is, right?"

"I'll give you a classic example for this. You could have someone targeting a lot of different geographic areas including some that are really prime and competitive and others that are very inexpensive and also very low quality. We'll take an example of, let's just say I'm targeting Utah and I target the entire state of Utah, and then we have the Salt Lake City metro or maybe St. George, these different areas, Park City that could be good, and then we have the boonies where it's not good."

"So what people do sometimes is they were bidding just really high, and what happened is they got mostly leads in Salt Lake. But if you use these metrics like we're talking about and you start to put those bids lower, then what you'd see is a greater percentage of your leads start to come from these out-of-the-way places. And there you have a really low revenue per lead. So your ROI actually suffers from this."

"But it's important to note that if that happens, that's just an example, right? That the same thing could happen with keywords, it could happen with whatever. You always had that weakness and that waste in your campaign. You're just exposing that waste by changing the amount of your budget that goes towards it inadvertently by lowering your bids. If that's the case, what you need is to be bidding properly. We'll talk about this in the... when we talk about best-case scenarios of bidding the right amount per thing."

"But anyways, basically what I'm saying is lowering bids gets a lot of flak for a lot of stuff when it's not really the cause of the issue most of the time."

"Yeah, do you have any comments or notes on that?"

"Yeah, I think that's... that's right on where if you are confident that your ad copy is strong, that your keywords are strong, that your landing page is strong, that those things aren't the issue, then it's safe to work on bids as your main lever of in-account optimization. But if those things aren't in a good place, then just changing your margins isn't going to help you drive better performance. Those areas are... are going to need to be addressed before you focus on just your bids."

"Yep, I 100% agree that there's a time and a place to... to focus on these bids because you don't want to double down on the wrong part of your campaign, right? But that's a foundational issue with the campaign."

"Yeah, so on that topic, let's talk about how you do this the best. What are some examples of bidding on a really high level in your opinion?"

"Yeah, I think it's important to... to understand that within a campaign, there are various ad groups that you have built out in your campaign with different themes of searches, and those different themes... different levels of quality that over time you'll see patterns of which ad groups bring in the best margin and which ones tend to have a better... like quality ratio. And so it's important to bid based on those ratios of quality and not bid equal across all of them because they all aren't bringing in an equal number of deals at an equal... like level of return."

"And so the gold standard of... of bidding for me is bidding on quality at the ad group level as well as at the location level where you're bidding based on where you see the best results and being able to balance that... that line between volume and efficiency at as granular level as Google will allow."

"I love what you're saying. I think that some people misunderstand that sometimes because they have a different mindset going into it, and it's the... best way I would describe it is it's a black and white mindset where the way that they would make it work is, let's just say this one keyword has a much higher cost per lead than this other one. They would just cut the bad one and keep the good one, or they would keep both and just hope it gets better. When what you're talking about is basically everything gray."

"So a lot of people would look at a search like, for example, 'sell my house' and they would say that's not motivated. If someone searches 'sell my house fast,' they're motivated. If they search 'sell my house,' they're retail. Which, by the way, you have no data to say that, so you're just... you're just throwing random stuff into the universe and hoping that you're right. And most of the time you're not."

"But let's just say you do have some data for that. Let's just say keyword one is 'sell my house fast' has a 30% higher chance of being motivated than keyword two. What a lot of people would say is you cut keyword two and you keep keyword one. What you're saying is you change the way that you bid on those so that you're bidding more on one of them that's better quality and less on the other that's lower quality."

"The same could be true for locations, right? Maybe I really love leads in Salt Lake City, but I can also close deals in Dallas. It's not that it's black and white like I either want to be in both or I want to be in one. It's that I probably want to make sure I'm really aggressively bidding in Dallas... aggressive from a low bidding standpoint to reflect the fact that those leads have less value to me. And then I'm more aggressive in a positive way in Salt Lake where I reflect that those leads have a very high value to me."

"And it's this tiered approach to bidding that makes a really big difference because it gives you everything. If you go one way or the other, basically... let's just say you have the two locations and you just bid the same on them. You're going to be overpaying for the location you don't want and you're going to be underpaying for the location you do want. But let's just say you cut the one. Now you have more of a diminished return in the other one and you do get all your leads there, but you actually decrease your return on investment compared to if you understood all the dynamics of the different locations and you're able to bid appropriately to value, right?"

"And I think this goes back to what I was saying earlier about being able to identify where you can win where other people can't in... in your market. And so if you only bid on... on those terms or in those locations where everyone's bidding, then you're going to get caught up in... in a low margin game. But if you can find efficiency on those terms or in those locations where... where people aren't bidding because they think they're a waste, then all of a sudden you're... you can find these high margin, low volume plays to help offset where you might see lower return but higher volume in those more... more expensive areas. And so if you go all in on... on just the high cost terms and locations, sure you'll be okay, but you're losing out on these low volume plays that can be very effective as well."

"Yeah, yeah. I think one way to... to look at that is that there's a lot of gray even when it comes to what price things go for. Like, it's so common for people to just follow the market and just say the average cost per click for this keyword in this area is this, therefore that's what I'm going to bid, as if that's a smart way to understand what the value is going to be to your business, right? It probably correlates at least a little bit. If other people are willing to pay more, yeah, then it's worth more. But the real value is understanding what are people underpaying for that was more valuable than what they think it's worth?"

"That's where data comes in so useful to know, for example, what is the search term that has more value than what other people are willing to pay? Or what are the search terms that other people are over-bidding on and I'm going to bid low? And then also understanding that there's everything in between. If, let's just say, the average cost per lead in a market is $300, there are going to be leads... I know I'm oversimplifying by even saying that leads sell for a certain amount, but you know, humor me. There's going to be leads that sell for $600 in that market, and there's going to be leads that sell for 500 and 400, 300, and $100 and $250. There's going to be... at every one of those price points, there's different leads. It's just they average out to 300."

"So it never hurts to put a lowball offer on a lead, basically is my opinion of it. If you say that that one lead with whatever parameter it is, be it a keyword parameter, be it a location parameter that makes it less valuable to us, the question you have to ask yourself is: What if it cost x% less? Would it still work for you? And I can guarantee there's a price where it works. Maybe it's like 1% of the price or something like that. Maybe it's really low value. But there's a price where that works for you, and it's about bidding that. And you might not win all the volume, but when you do, you win it at a great price. And being more spread out and sending more lowball offers on more things gets you a better return on investment than over-bidding on a smaller number of things."

"Yeah, definitely. And I think it all is... it all comes down to bidding based on your own data of how you and your business performs and not based on the market, not based on gut, is going to help you to find the best balance between volume and efficiency."

"Yeah, absolutely. Do you want to shed a little bit of light into our strategy for this? Because I could tell you one thing that people really struggle with on this is it sounds great in theory until you realize how much data you actually need to pull that off, right? For me to know that this keyword has a better value for me than this other keyword, I don't think a lot of people really... how much data that takes. Because you're splitting your data like 60 ways across 60 different keywords, and the real value is going to come from the deals and their spreads at the end of the day. And I see people like quote-unquote like optimizing based on this, but they have five deals across 60 keywords, as if you can even know what's working. So I think that's the overwhelming part of this is yeah, theoretically if I spent a million dollars every month on ads and had tons of data coming in, I could actually know the necessary information to bid properly. But if I don't have that, what do I do?"

"Yeah, so how we do it is we pull in all of what's termed the offline data from all of our clients. We can pull in the lead volume, the cost per lead, the lead to appointment ratio, the cost per appointment, the cost per contract, the... all of those metrics from all of our clients historically, which I believe up until now we spent... believe $12 million in our Google MCC. So there's a ton of data."

"Yeah, that's probably overly conservative if anything."

"Yeah, probably. So with... with all of that volume and all of that data that... that goes beyond that lead being acquired, where're... we're able to break down at the keyword level and at the ad group level which... which themes bring in the best efficiency. And then what we do is we set our bids initially based on those proportions of which ad groups bring in the best quality versus wh... which ones bring in the worst quality. And we bid in that gray and... like you were saying, an average investor is going to need a lot of spend to get the volume of offline data of deals especially to be able to set bids based on actual closed and not just what you estimate you can close a lead at. So we're basing these bids off of volume that the average investor probably won't ever get on their own."

"Yeah, yeah, absolutely. And I think to say the same thing more simply, it would just be that in Google Ads, the... especially for real estate investing, the ultimate advantage that you could have is knowledge and data about what these things are worth. And nobody has that much data on their own side, right? That's why it's so important to work with a partner that has more data than you have. That's the value that a partner brings to the whole partnership is they can understand those values in ways that you wouldn't be able to."

"Theoretically, it has been said with Google that if you did nothing right other than bid properly, then you would be fine. And it's true. Like, to think about a crazy example, right? You could say, let's just say we're talking about keywords. You could... you could accidentally bid on a keyword that is somebody searching for a divorce lawyer in Memphis, and you're in Salt Lake City, right? And one person who searches for a divorce lawyer in Memphis between now and the end of time is going to be someone who also has a house to sell in Salt Lake City. It's such a small likelihood, right?"

"So there's a proper bid for that, and if you actually knew what that was, you'd probably know that bid is one/100th of a penny or something like that. And then if you bought it at that price, you would just get the right person when they came, right? So theoretically, you could bid on every single keyword, and if you bid the right amounts, then you would be driving value from it because bidding is what creates return on investment. Because your cost per lead and your revenue per lead are what make your return on investment. If you can understand your revenue per lead and how to predict that, then you know exactly what your cost per lead could be. And if you're using the target CPA bid strategy, then you can set your cost per lead to exactly that to make sure you get a certain return on investment."

"Yeah, absolutely. Yeah, is the heart of... of paid search is your bids."

"Yeah, that's it for today's episode. That is number six out of seven on this series of the... what are we calling it? The uh... PPC Essentials?"

"Yeah."

"So embarrassing. I think I've asked you that on every single episode that we've had about PPC Essentials. So anyway, that's 6 out of 7. Next time we're going to be talking all about some of the settings. Spoiler alert: there's certain buttons that if you don't press in Google Ads, this could be a... something as simple as unchecking a box that makes a difference between every lead you get being spam and having great quality of leads. It's not the sexiest topic, but it is so important. So we're going to talk about that, and I think there'll be some great nuggets there. So I will see you there next week."

"Awesome."

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