There are a lot of ways to manage bids for your SEM campaigns. If you’re handling your optimizations by hand and need an assist, you might find the solution in a flexible bid strategy. Google introduced this feature early last year, then expanded it to include a strategy called Target ROAS (Return on Ad Spend) in October. If you run click-to-call advertising, things are about to get a lot more interesting.
ROAS vs. ROI
Many SEM programs are managed to a target ROI, which is a percentage calculated as profit divided by cost. ROAS only differs slightly, as it is calculated as revenue divided by ad spend. If you spend $7 on advertising and generate $14 in revenue, your ROAS will be 200%. Assuming no expenses beyond ad spend, the ROI for that same advertising would be 100%. This is important to remember when setting up your targets.
An incoming phone call to a business can mean a lot of things, and these new features should assist local businesses with assigning value to those calls. Consider this ad for a local bank:
What does a click on the Call button mean for this advertiser? It could be an existing customer calling for bank hours, or it could be a new customer looking to get a loan. The ROAS for those two kinds of calls are very different, but until now it was difficult to automate the process of identifying them.
When you set up a new call extension, you’ll be presented with the following form:
The wealth of options available here are a bit daunting, but the important points are the Google forwarding phone number and the “Report phone call conversions” settings. By using a Google forwarding number, you enable the tracking of conversions and more advanced options for flexible bid adjustments.
For example, you could set up a campaign with a call tracking number that only appears during business hours, and another for after-hours calls. This would enable automatic optimization by placing a higher value on daytime call conversions. This could be taken a step further and you could add conversions based on call length. A ten minute call to a bank would almost certainly carry a higher potential value than one that lasted under a minute.
Flexible Bid Strategies
To bring automated optimization to your account, you’ll want to enable a flexible bid strategy. First you’ll click the Shared Library link and add a new “Target Return on ad spend” strategy.
Once you’ve created the strategy, you’ll need to apply it to your campaign. This can be done via the Campaign Settings tab.
As always, you should monitor your reporting to determine whether or not these new settings provide better results for your campaigns. You may need to change your Target ROAS over time to get the balance just right.