How To Calculate PPC Bids For CPA or ROI Targets

Nudging PPC Bids

Managing PPC bids can be both boring and addictive. When you’re sifting through hundreds of keywords for the umpteenth time this month, it’s not the most exciting task in the world. However, when you see the fruit of your labour in action, and your 95 character beauty surges into pole position to claim gold, it’s really rather satisfying.

As I’m sure you know, there are universal formulae to making that happen. Something that’s always humoured me though, is the Vegas-like mentality of the Modern PPC Manager. Striving to impress, they just can’t help giving that all important bid a slight ‘nudge’ at 5pm on a Friday afternoon, hoping to wake-up on Monday morning to a bucket load of extra conversions. Surprise, surprise; it rarely turns out that way.

‘Hunch bidding’ as I call it, can have its place in PPC as I don’t believe bid management should be 100% robotic. However you can only really pull off educated-guesswork  if you know the Avg. CPC and Positional patterns of an account, having worked on it for a long while.

Whether that’s you or not, there are two simple formulae you need to know. Remember, they’re to be applied at keyword level. These form the blueprint of simple, manual adjustments or complex bidding strategies.

 

 How to Calculate PPC Bids for a CPA Target:

Conversion Rate x Target CPA = Maximum Bid

For example, if your keyword [play poker online] has a conversion rate of 5.8% and your target CPA is £45, your maximum bid should be £2.61.

 

How to Calculate PPC bids for an ROI Target:

(Conversion Rate x Profit per Conversion) / Target ROI % = Maximum Bid

For example, if your keyword [holiday to las vagas] has a conversion rate of 1.4%, your Profit per Conversion is £330 and your target ROI is 110%, your maximum bid should be £4.20.