Help! I Raised My AdWords Bids and Got LESS Traffic!


If you’re a reader of this blog, you’re probably familiar with the basics of the Google AdWords auction. You place a bid, you win a position on the page. And the higher your position, the more likely you are to get the click.


raise adwords bids

… right?


If you’re a small business with a limited budget, you’ll need to be smarter than this. Let’s use a simple example to illustrate why.

Related: How to Use Flexible Bid Strategies in AdWords

How Raising Your Bids Could Lower Your Traffic

Let’s imagine this is the universe of possible impressions you could get. It represents searchers who meet all of your criteria: the right search term, the right geography, the right language, and the right time of day.

possible adwords impressions

And let’s make a few basic assumptions about your performance:

Current Bid: $1.25

Current Average Position: 4

Expected Click-Through Rate: 2%

Expected Clicks: 100 (2% of 5000)

Expected Actual Cost-Per-Click: $1 (80% of your bid, just as a nice round number)

Expected Total Cost: $100 ($1 x 100 clicks)

Budget: $100

Budget / Expected Total Cost = 100%

Percentage of Auctions: 100%

Actual Impressions: 5000 (100% of 5000)

Actual Clicks: 100 (2% of 5000)

Great! You have enough budget to cover every single click that Google expects you to get at the price they expect you to pay. So, in order to use your entire budget, they’ll enter you into every single auction, in the hopes that you’ll get 2% of the clicks, pay $1 for each of them, and get a bill for $100.

Ad Impressions to Clicks

But you’re disappointed with your traffic. And you’ve noticed that your average position is kind of low on the page, maybe below the fold. You’ve got room to grow, so you raise your bid. Let’s change your bid and see what happens:

Current Bid: $2.50

Average Position Goes To: 3

Expected Click-Through-Rate Goes To: 3%

Expected Clicks Goes To: 150

Expected Actual Cost-Per-Click Goes To: $2

Expected Total Cost Goes To: $300

Budget: $100

Budget / Expected Total Cost Goes To: 33%

Percentage of Auctions: 33%

Actual Impressions: 1667 (33% of 5000)

Actual Clicks: 50 (3% of 1667)

If you make no change to your budget, you only have enough to cover a third of the clicks that Google expects you to get at the price they expect you to pay. So in order to use your entire budget, they can only enter you into a third of the auctions! And even with the higher CTR at the higher position, your real number of clicks goes down!

lost ad impressions

Maths – they can sting.

Google actually provides you this information in a column called “Search Lost IS (Budget).” It’s displayed as a percentage and represents the percentage of the universe of possible impressions (see above) where you were not even entered into the auction because you couldn’t have afforded the potential click.

Search Lost Impression Share

Example impression share columns

Just as a quick aside: Search Lost IS (rank) is the percentage of possible impressions where you were entered into the auction, but you lost.

Key Takeaway

Always move your bids and your budgets in tandem: Raising your bid isn’t doing you any good if you can’t afford those more expensive clicks. If you decide that you need to raise your bids, budget for it.

Improving Ad Rank Through Quality Score

Now let’s look at the same example, but in this case, the advertiser chose a different tactic for improving their Ad Rank: Quality Score. They worked on making sure their text ads were highly relevant to a small group of keywords. And in return, Google gave them a deeper discount from their bid.

Current Bid: $1.25

Average Position Goes To: 3

Expected Click-Through-Rate Goes To: 3%

Expected Clicks Goes To: 150

Expected Actual Cost-Per-Click Goes To: $.75

Expected Total Cost Goes To: $112.50

Budget: $100

Budget / Expected Total Cost Goes To: 89%

Percentage of Auctions: 89%

Actual Impressions: 4450 (89% of 5000)

Actual Clicks: 133 (3% of 4450)

adwords impressions

You’re still budget-limited, and you’ll lose some impression share, because you can’t afford every single click (the expectation for how many clicks you’ll get has gone way up). But your traffic this time has increased.

Here’s how the three scenarios compare:

impression share and total clicks

Key Takeaway

Work on your Quality Score instead of raising your bids: With an increased Quality Score, extra clicks require no change in your bid or your budget.

A Note on Lost Impression Share

In my example, the advertiser was most concerned about increasing traffic to their site (clicks). But I’m sure that some of you are looking at the bar above and are alarmed that there’s so much lost impression share. Neither view is wrong, necessarily; it depends on your goals. Do you just want people to see your ad? (Branding) Do you just want people to visit your site? (Consideration) Or do you need people to convert?

Key Takeaway

Know your goals: You might not have this problem at all if you’re focused on some other metric like ROI.

Using Extensions to Improve Ad Position

If you’re dead set on improving your position on the page, Ad Extensions are another way to do it. Since October of 2013, the AdRank formula has included the “expected lift” from extensions. If you don’t have extensions turned on, your expected lift is zero. (And adding them increases your expected lift by an infinite percentage. Maths again!) If you already have them, do some A/B testing and work on improving those along with your text ads. Just like working on your Quality Score, you’re likely to get a lift in clicks, but a decrease in Impression Share.

Key Takeaway

Add or improve Sitelinks and other extensions to your campaigns: Just like with Quality Score, these extra clicks require no change in your bids or budget.

In Conclusion…

As with all methods of optimizing your account, the most important thing is whether your spend is working for you. Hypothetically, if you can make $1.01 by spending $1.00, you should do it. We all live in the real world, though. You’re a small business person and investing more money in marketing is a calculated risk. Hopefully I’ve given you a little extra insight into what you’ll be getting yourself into if you raise your bids. Maybe going after some “free” extra clicks first will be better for your business.

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Larry Kim
Apr 03, 2014

this is why one of the first things that the wordstream bid algos check for is the available budget before suggesting any bid increases.

Robert Brady
Apr 03, 2014

While the post title is very catchy, it's borderline misleading. If you have a static budget and raise bids OF COURSE you'll get fewer clicks. Seems like a lot of words to come to a very simple conclusion.The only possible justification here would be testing whether the 50 clicks from a higher position convert better than the 100 clicks from the lower position.

Elisa Gabbert
Apr 03, 2014

Hey Robert, this actually happened to a client of ours, so we wanted to clear up the apparent confusion. May be obvious to more experienced advertisers, but not to beginners.

Larry Kim
Apr 03, 2014

robert, i see no evidence to suggest that ads in different positions convert at different rates.

Alan Mitchell
Apr 08, 2014

@ LarryI think sitelink ad extensions may change that. Sitelinks give advertisers extra room to promote additional benefits, features, and selling points, which could help top-placed ads better communicate their selling points than advertisers which are lower-down on the SERP, potentially increasing conversion rates: clicks from a keyword in position 1 with full sitelink visibility could in theory result in more conversions than 100 clicks from that same keyword in position 10 with no sitelinks.

Andy Stefano
Apr 04, 2014

Hi Robert,Thanks for noticing my catchy headline! You're absolutely right that the static budget is the lynchpin of the whole scenario. I'm ok with that because that seems to be the scenario that's most applicable to our user and readers.If I had limited my article to just the relationship between bids and budgets, I could have written out the math like this:($1 x 100 clicks) = $100($2 x 50 clicks) = $100But I think there are some great lessons in here about Impression Share and Quality Score  that aren't visible in the simpler version.

David Rothwell
Apr 03, 2014

Good post!I discovered the reverse situation a few years ago.Client had quite a large daily budget (£100 / $160 per day) in an expensive space and could only buy limited and expensive clicks.We had a very consistent level of impressions and clicks for many months Google suggested 10x ing the daily budget, the market was that hungry, (but client was unable to track conversions so didn't know the value exchange and wouldn't raise budget).So we reduced bids instead to make budget go further.Impressions and clicks zoomed up.Huh? Counter-intuitive.That's when I realised that Daily Budget is The Gatekeeper.So now I only work with clients who can safely reach unlimited daily budgets, at profit.How? Three words - "Read My Book" (Gordon Gekko, Wall Street 2 Money Never Sleeps).Thanks for reading!

Andy Stefano
Apr 04, 2014

Thanks for reading, David. I like the metaphor of Daily Budget as "Gatekeeper." (Although not always the most reliable gatekeeper:

Martyn Wright
Apr 04, 2014

As an aside to this, there's potentially an additional factor where a phrase/broad matched keyword might be getting a certain amount of traffic, but by increasing the bid, you start to appear for additional, more expensive queries that you weren't before, which then take the budget away from the original phrases that were performing.

Alan Mitchell
Apr 08, 2014

@ MartynI agree, this is something myself and others have found to be true:

Apr 05, 2014

Thank you for putting together such informative material and making it available to us. I liked all the topics.

Jonathan Cohen
Sep 30, 2014

Hi Andy, Nice post with a simple way to visualize this case. Have you ever heard of a case where you kept your bids the same, doubled your daily budget and then saw Impression Share drop?

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