Exploring and Exploiting data to optimize smart bidding strategies (Google search ads optimization)
(Inspired by Google’s training course on exploring bid strategies for optimization)
First principles and strategic thinking to achieve competitive advantage in the space of search.
We incorporate the concept of exploitation as both a process and a mindset into Google’s course on best practices for optimizing search ads. While the original course focuses on data exploration, the act of analyzing data turns information into valuable insights that can inform business and marketing strategies. Boosting digital marketing performance necessitates examining past data and consumer information to develop an optimized campaign strategy. This strategy is typically founded on the current competitive landscape and our projections for the future. To improve performance, we require transparency into the key performance indicators (KPIs) associated with our objectives. Luckily, Google’s advanced advertising platform offers ample data to guide marketing strategy, facilitate strategic decision-making, and identify the most effective spend-to-objective ratios
To optimize campaigns and bid strategies, the first step is to regularly review and manage targets and budgets in response to the ever-evolving search landscape. As users explore novel methods of using search engines to locate desired information and competitors adjust their search tactics to improve outcomes and keep pace with their rivals, we must effectively leverage data to create competitive strategies. In the case of Google search, competitiveness hinges on relevance relative to competitors. However, as technology advances, first-principle thinking can be employed to exploit unassailable search assumptions and gain a strategic edge.
The first principle and search
The first principle approach, specifically in computational chemistry looks toward identifying assumptions and applying simulation to see what happens. This is the perfect research mindset for a google search executive or general digital marketer to use. “Computational quantum chemistry,” says Martin Head-Gordon, professor of chemistry at the University of California, Berkeley, “is basically the field that develops theoretical algorithms and software based on quantum mechanics to predict properties of molecules from first principles.” Relating this to marketing we can develop data to predict performance and create messaging the customer needs to see for them to move from deliberation to commitment from first principles.
In the world of PPC, we will refer to this as Explore and Exploit.
The first principles of search
- The user is always finding new ways and using new search queries/techniques to find what they are looking for.
- Competitors adjust strategies to deliver the right message at the right time to achieve optimal outcomes as the search space evolves.
- Competitors adjust strategies to achieve better performance in search and the metrics relative to competitors in the search space.
As you progress in your career as a professional in PPC, keep in mind the first principles thinking to unleash creativity into delivering the right message at the right time. To do this we use how thinking to come up with solutions.
Countering the first principles of search.
- How can we constantly meet the customer to provide them with the information (advert) that they need to find what they are looking for?
To constantly meet the needs of customers and provide them with the information they seek, it’s crucial to have a deep understanding of their search behaviors and preferences. This can be achieved by leveraging data insights and conducting ongoing market research to stay current with customer needs and trends. Additionally, continuously monitoring and analyzing search data can help identify gaps and opportunities to improve messaging and targeting.
- How can we create competitive strategies to deliver messaging to the consumer in a way that is different from the competition?
Creating competitive strategies requires a keen understanding of the competition and its tactics. Analyzing their messaging, targeting, and positioning can help identify ways to differentiate and deliver messaging in a unique way that sets your brand apart. Utilizing data-driven insights and leveraging emerging technologies, such as artificial intelligence and machine learning, can also help create competitive strategies that are both effective and innovative.
- How can we counter the strategies used in the search space that competitors are using to deliver the right message at the right time before or more effectively than the competition?
To counter the strategies used by competitors in the search space, it’s important to stay ahead of the curve and anticipate trends and shifts in consumer behavior. Conducting ongoing research and monitoring industry news and developments can help identify new opportunities and challenges. Additionally, leveraging advanced targeting and segmentation techniques, such as geotargeting and audience segmentation, can help deliver messaging to consumers at the right time and in the right context, ultimately driving engagement and conversion.
Exploring and Exploiting
Exploring and Exploiting data is a key practice and mindset to optimizing bid strategies and creating an advantage over competitors. Using this methodology allows the PPC specialist or executive to extract information from bid strategy reporting to enable the executive to enhance a smart bidding strategy by simulating performance goals based on adjusting ad spend and strategy bid goals.
Exploring data provides you with a starting point for a hypothesis test to be conducted where we aim to simulate multiple outcomes.
To explore data we use the Bid Strategy Reporting Tool.
To exploit the data we use the Bid Strategy Simulation Tool.
To use Bid Strategy Reporting
- Select a relative campaign – In the bid strategy column and click on the bid strategy type to open the report.
This will allow you to review (Explore) the performance history scorecard.
To use Bid Strategy Simulation
- Select a campaign you would like to explore and exploit. Locate the budget column and click on the simulator icon.
The campaign target simulator tables and graphs allow you to see how choosing different targets and budgets affects key performance indicators. What you would like to do here is find the perfect ad spend-to-objective ratio.
The process of exploring and exploiting data can be seen in the framework below.
Here we’ve developed a process for exploring and exploiting data to optimize automated bidding strategies. It looks like this.
IRS – Identify – Review – Simulate (Roxleigh Fisher Higher Media LTD)
Identify – Current campaign performance metrics and the metrics relative to your strategic objective.
Review – Performance metrics based on performance objectives (CTR/CR/CPA. etc)
Simulate – The data in the bid strategy simulation tool to find an optimal outcome relative to your bid strategy and objective.
So for example, if you increase ad spend by £1000 and get 300 further conversions or if you increase ad spend by £1500 and get a further 700 conversions, your obviously going with the latter option. The simulation tool allows you to find the sweet spot of ad spending to performance objective ratios. Although the data provided by the simulation tool is never 100% accurate, it comes close.
Exploring and exploiting Maximize conversions (value)
Here we want to focus on conversion volume.
In order to optimize maximum conversions/value what we need to do here is allow the algorithm space to find extra conversions/value. To achieve this we’ll need to broaden targeting. You can do this by adding an audience, expanding the location radius, and adding new keywords or ad groups.
Exploring and exploiting CPA/ROAs
To give the algorithm space within the Target CPA smart bidding strategy, increase the CPA. This won’t necessarily increase your cost per action (Conversion) but rather find space for google to find conversions.
To give the algorithm space with ROAS. Increase the daily budget but lower your required ROAS.
The key to optimizing automated bid strategies is to find space for the algorithm to find conversions/value. This is achieved through reviewing data and manipulating budget and bidding within CPA/Conversions/ROAS metrics accordingly.
Copyright Roxleigh Fisher
References
https://skillshop.exceedlms.com/student/path/200868-explore-search-ads-optimisation-best-practices
https://www.science.org/content/article/chemistry-first-principles-calculations