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4 Advanced Ways to Calculate Bid Adjustments

Now bid adjustments are available across mobile, tablet and desktop as separate elements where you can have more control over AdWords bidding at the device level. In this article, we will be going through 4 approaches to calculating device bid adjustment ratios,  but before we do so, it’s important to mention this is an ongoing process, bid modifiers should be updated on a regular basis as consumer behavior evolves over time.

1. Cost per Conversion based calculation

This is calculated by dividing the total cost per conversion by the device cost per conversion.

Bid adjustment ratio = [(Total CPA/ Device CPA) – 1] * 100

When to use?

  1. When all of your products or services have the same value since the calculation doesn’t take into account the “Revenue” which can be potentially misleading especially when it comes to e-commerce websites.
  2. When there is no huge difference in conversion rate across devices and the CPC intensely varies from device to device.  This calculation is not sensitive to CPC, it doesn’t take into account the CPC fluctuations on different devices. So if your CPC on mobile is  2 times less than desktop due to low competition, and your desktop conversion rate is just 1.2x higher than mobile, this ends up giving a lower CPA on mobile than desktop, however, desktop has a higher conversion rate than mobile but it isn’t significant enough to lead to a better CPA.

2. Conversion Rate based calculation

This is calculated by dividing the device conversion rate by the total conversion rate.

Bid adjustment ratio = [(Total CVR / Device CVR) – 1] * 100

When to use?

  1. Similar to the CPA-based calculation when all of your products or services have the same value.
  2. When there is a significant difference in conversion rate across devices and the CPC doesn’t highly vary from device to device. Unlike the CPA-based calculation, This calculation is CPC sensitive it takes into account the CPC fluctuations on different devices which could be misleading especially when there are a significant CPC variations across devices. For example, let’s say your desktop conversion rate is 3x higher than mobile and your desktop CPC is just 1.5x higher than mobile, using this CVR-based calculation will be optimal in this case as the CPC difference doesn’t outweigh the CVR difference.

3. Revenue per Click based calculation

This is calculated by dividing the device revenue per click by the total revenue per click

Bid adjustment ratio = [(Total RPC / Device RPC) – 1] * 100

When to use?

  1. When your products or services have different value since this approach takes into account the average order value driven by each device.
  2. When there is a significant difference in conversion rate across devices and the CPC doesn’t highly vary from device to device. This calculation is also CPC sensitive it takes into account the CPC fluctuations on different devices which could be misleading especially when there are a significant CPC variations across devices. For example, let’s say your desktop conversion rate is 3x higher than mobile and your desktop CPC is just 1.5x higher than mobile, using this CVR-based calculation will be optimal in this case as the CPC difference doesn’t outweigh the CVR difference.

4. ROI based calculation

This is calculated by dividing the device ROI by the total ROI.

Bid adjustment ratio = [(Total ROI / Device ROI) – 1] * 100

When to use?

  1. Likewise, the RPC-based calculation, when your products or services have different value since this approach takes into account the different average order value driven by each device.
  2. When there is no huge difference in conversion rate across devices and the CPC intensely varies from device to device.  This calculation is not sensitive to CPC, it doesn’t take into account the CPC fluctuations on different devices.
Conclusion

Bid adjustment is an ongoing process that should be updated on a regular basis as consumer behavior evolves over time, make sure to pick the right approach to your business and please feel free to leave a comment below if you have any questions.

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