Bid optimization in DoubleClick Search V3
Over the past several months, members of the DoubleClick Search V3 (DS3) team have been hard at work on updating our automated bidding tools, which we call Bid Strategies. The Bid Optimization team’s goal is to provide you with powerful, transparent, and flexible bidding tools that help improve the performance of your search campaigns.
The new algorithm delivers more conversions at your Target CPA
94% of the bid strategies tested* saw improved performance with the new algorithm compared to the old. These strategies saw either an increase in conversions paired with a lower CPA, or a decrease in the difference between your goal CPA and actual CPA.
Here’s an example of a few results:
Company 1: Insurance Company
CPA w/ old algorithm= $40.07
CPA w/ new algorithm = $27.83
31% lower with the same number of conversions.
Company 2: Travel Company
Two CPA bid strategies used.
CPA w/ old algorithm= $3.55
CPA w/ new algorithm = $2.66
Conversions increased from 69 to 236
CPA decreased 25% and conversions increased 240%.
* For our tests, we selected CPA bid strategies that receive at least 20 actions per week and that do not have all their keywords sitting at their min or max bid limits.
Starting next week, for most CPA bid strategies you should see similar performance gains, especially if you follow the guidelines in “How to take full advantage of the new CPA algorithm” section below. Please note that factors such as tight bid restrictions and normal week-to-week traffic fluctuations may limit the observable impact of the new algorithm.
What’s different about the new CPA algorithm?
Remove the middle man from the equation
In the previous version of DS, all bid strategies were mapped to target average position goals. The algorithm then increased or decreased keyword bids to hit this position.
Our testing has revealed that by removing the added step of optimizing to a calculated position, our algorithm is able to achieve either more desired actions at a Target CPA or the same number of actions at a lower CPA.
Optimize spend across all keywords in the strategy
Instead of optimizing the bid of each keyword in isolation, we optimize the spend across different keywords in the same bid strategy. More specifically, we favor the low CPA-high conversion ratio keywords, and therefore maximize conversions across all keywords. This is also known as Portfolio Optimization.
Factor in click-to-conversion delay
We measure the average time from clicks to conversions for each bid strategy.
- Using this average click-to-conversion delay, we can estimate the total number of conversions that will result from existing clicks.
- In other words, we can now base our bid calculations on the total expected conversions, instead of only conversions that already occurred.
- This improvement will especially benefit advertisers with long delays between clicks and conversions.
Bid on low-volume keywords as a group
We cluster very low-volume keywords that are in the same bid strategy together. We then aggregate data (e.g., clicks, conversions, and cost) for those keywords and treat the group as one bigger keyword. This allows the algorithm to adjust bids based on group level conversion and cost stats. This helps avoid the very volatile cost/conversion behavior that can be typical for such keywords
How to take full advantage of the new CPA algorithm
We’re very excited about the improved performance results we have seen with our new algorithm and encourage you to set up your CPA strategies to maximize on these improvements.
1) Test out a CPA goal
If you manually manage your bids to a target CPA goal, and you haven’t been using CPA bid strategies, we encourage you to give it a try.
2) Open up your keyword bid limits
If your keywords are constrained by the min or max strategy bids, they won’t be able to get the most out of this improved algorithm. To see if your bid strategies are constrained by bid limits, please add % at max or min bid column in your keyword or bid strategy view:
Read more on % at max bid and other new bid strategy metrics here.
3) Relax or remove the position constraints
If your primary concern is to maximize conversion volume while remaining at or below a CPA target, consider relaxing or removing position constraints to allow the new CPA algorithm to make more optimal choices.
4) Wait for 2 weeks before evaluating the results
Since conversions can spike up or down in a single week for various reasons, we recommend looking at a longer time period when evaluating the success of your bid strategy.
What’s next for the DS3 Bid Optimization team?
We’re currently in the process of updating algorithms for ERS and Floodlight bid strategies! Be on the lookout for more ways to help you get the most from your search campaigns in the next couple of months.
Posted by Xiaodong, Zhen, and Ardan from the DS3 Bid Optimization Team
