Recently a customer asked us, “Why should I raise bids on keywords that already have high quality scores?”
I answered this question via email, but I thought I’d post the answer here too so everyone can benefit from this bid management best practice. Here’s my response:
We’ve analyzed thousands of AdWords accounts and found a strong correlation between Quality Score and cost per conversion.
Meaning, if you were to look at the cost per conversion across the different keywords in your account, comparing the CPA of the keywords with a Quality Score of 1 to the CPA of Quality Score 2 keywords, Quality Score 3 keywords, and so on, you would see that on average, the lower your Quality Scores, the higher your average cost per conversion. (We compared these findings with our partners at Google and they confirmed this is indeed the case).
The best practice, therefore, is to raise bids on keywords with higher Quality Scores (e.g., 5-10) and lower bids on lower Quality Score keywords (0-4), thereby allocating more clicks (and therefore budget) on the more productive and cost-effective keywords in your account, and fewer clicks (and budget) on the less productive keywords in your account. This allows you to increase the number of conversions that are costing you less.
Keywords with low Quality Scores have higher costs per conversion on average due to various factors:
- The actual CPC paid by an advertiser for a keyword is inversely proportional to the Quality Score of a keyword. Meaning, low Quality Score keywords can have a very high cost per click (CPC). (To see how this works, check out our infographic on How AdWords Works, which explains the relationship between CPC and Quality Score.)
- A keyword with low Quality Score likely has a low click-through rate (CTR), and therefore may be relatively less relevant to your account than those with higher Quality Scores.
However, we strongly believe that Quality Score is just one of many factors that should be taken into consideration when doing bid management. Ultimately, if a target CPA isn’t being met, then it really doesn’t matter what the keyword Quality Score is! That’s why our different bid rules have an order of precedence – meaning, the primary factors used by our bid tools are the available budget, cost per conversion, and keyword competition metrics if they’re available, but we’ll also consider factors like click-through rate and Quality Score as secondary, supporting metrics.
Additionally, our bid management software has a high degree of flexibility via optional customization (such as target CPA, Bid Cap, etc.) to ensure that the bid recommendations meet the particular needs of your business.