How do you determine when to decrease bids for underperforming keywords?

Decreasing bids for underperforming keywords is a crucial part of optimizing your paid search campaigns. By reducing bids for keywords that aren't delivering strong results, you can prevent overspending and redirect budget to more profitable keywords. Here's how you can determine when it's time to decrease bids for underperforming keywords:

1. Monitor Conversion Rates
Conversion rate is one of the most important metrics to track. If a keyword is consistently bringing in traffic but failing to convert, it's likely underperforming and may require a bid decrease.

Threshold for Action: Set a threshold for what constitutes an acceptable conversion rate for your campaign (e.g., 2% conversion rate). If a keyword falls significantly below this threshold, it might be time to decrease the bid to avoid overspending.

Example: If a keyword has a high CTR but a low conversion rate, this indicates that users are clicking but not converting. Decreasing the bid helps limit wasted budget and maintain more control.

2. Assess Cost-Per-Acquisition (CPA)
If a keyword's CPA is higher than your target or is not aligned with your overall ROI goals, you may need to decrease the bid for that keyword to improve efficiency.

Threshold for Action: Compare the current CPA with your target CPA. If the CPA exceeds your target and shows no sign of improvement, it's a signal that the keyword is costing too much without delivering the expected results.

Example: If you target a $20 CPA for a particular keyword, but it's consistently driving $50 per conversion, a decrease in the bid can help lower the CPA and improve cost-effectiveness.

3. Review Return on Ad Spend (ROAS)
ROAS measures the effectiveness of your ad spend relative to the revenue generated. If a keyword is consistently yielding low ROAS, it may be time to reduce the bid.

Threshold for Action: Set a minimum acceptable ROAS based on your business goals (e.g., 400% ROAS). If a keyword is underperforming and yielding a lower ROAS, it's an indicator to reduce the bid.

Example: If a keyword has an expected ROAS of 500%, but it's only generating 100%, reducing the bid will help minimize the cost of non-performing traffic.

4. Evaluate Quality Score
Quality Score is important because it affects both your ad rank and CPC. A low Quality Score often means the keyword is not relevant enough to the user's search intent, leading to poor performance. This may warrant a bid decrease to avoid wasting budget.

Threshold for Action: If a keyword has a low Quality Score (e.g., below 4 or 5), it indicates issues with ad relevance, landing page experience, or expected CTR. In such cases, decreasing the bid may help prevent paying higher-than-necessary costs while you work on improving its quality.

Example: A keyword with a Quality Score of 3 and a high CPC is likely not performing well. Decreasing the bid can help optimize your budget while you improve the keyword's relevance.

5. Track Click-Through Rate (CTR)
A low CTR is another indicator that a keyword may not be attracting the right kind of audience or may have weak ad copy. A low CTR means that even if the keyword is generating impressions, users aren't engaging with your ads.

Threshold for Action: If a keyword has a consistently low CTR (e.g., below 1% or your campaign's average CTR), it may be an indication that the ad copy is irrelevant, or the keyword is too broad or misaligned with search intent. Reducing the bid can limit the number of unqualified clicks and focus the budget on higher-performing keywords.

Example: If a keyword like "best running shoes for marathons" has a low CTR, you might consider adjusting the ad copy or lowering the bid to avoid overspending on irrelevant traffic.

6. Assess Impression Share and Competitor Activity
Impression Share shows the percentage of total impressions your ad received versus the total available impressions for the keyword. If your impression share is low due to high competition, you may need to adjust your bid to find a more competitive balance.

Threshold for Action: If your Impression Share is low and you're not ranking as high as desired, a bid decrease might not always be the answer. However, if the keyword is showing low engagement (low CTR and conversion), it's better to decrease bids and focus on more relevant keywords.

Example: If a keyword like "running shoes for marathon training" is not performing well and you're losing to competitors, it could be due to high competition. In that case, reducing the bid can help focus budget on keywords with lower competition.

7. Examine Seasonality or Market Trends
Some keywords may perform well during certain times of the year but may underperform during off-seasons. If a keyword is underperforming due to seasonality or changing market conditions, consider decreasing the bid during these periods.

Threshold for Action: If a keyword is related to a specific season (e.g., "winter running shoes"), and it's not generating conversions during the off-season, decrease the bid or pause it entirely until the season begins again.

Example: In off-season periods, if a keyword like "winter coats" shows a significant drop in performance, reducing the bid helps minimize wastage and reallocates the budget to other products.

8. Look for Wasted Spend on Irrelevant Traffic
If a keyword is generating traffic but not converting, it's likely attracting the wrong audience. This might happen with broad match or overly generic keywords.

Threshold for Action: If a keyword is bringing in traffic that doesn't match the user intent, resulting in no conversions, consider reducing bids to minimize spend on unqualified visitors. This is especially common with broad match keywords.

Example: If the keyword "cheap running shoes" is attracting bargain shoppers who are not ready to buy premium products, decrease the bid to focus on keywords that better align with your target audience.

9. Check for Overlapping Keywords
Sometimes, you might have multiple keywords targeting the same or similar search queries. If one keyword is underperforming and another is performing well, it might be a good idea to decrease the bid on the underperforming keyword and focus your budget on the higher-performing one.

Threshold for Action: Use keyword cannibalization reports to identify keywords that are competing against each other. If one keyword is consistently underperforming while the other performs well, adjust bids accordingly.

Example: If both "best running shoes" and "running shoes for marathon runners" are targeting similar queries, but one is performing better, consider reducing bids on the underperforming keyword and reallocating budget to the stronger performer.

10. Look for Low-Quality Traffic or Irrelevant Clicks
Review the search query reports to identify whether your keywords are generating irrelevant clicks. If a keyword is bringing in low-quality traffic or clicks from users who are not likely to convert, it's time to decrease the bid.

Threshold for Action: If a keyword is attracting a large number of irrelevant clicks (e.g., the search query doesn't align with your product), it's a sign that the bid should be decreased.

Example: If the keyword "best marathon shoes for men" is attracting clicks from users searching for completely unrelated products, consider reducing the bid and using negative keywords to refine targeting.

When to Decrease Bids:
Low Conversion Rate: If a keyword brings traffic but no conversions, lower the bid.

High CPA: If CPA exceeds the target, decrease the bid to control costs.

Low ROAS: When the keyword yields poor returns, reduce the bid to improve profitability.

Low Quality Score: Decrease bids for keywords with poor ad relevance or poor landing page experience.

Low CTR: Decrease bids if CTR is significantly below campaign benchmarks.

Low Impression Share and Competitor Activity: If your ads are losing visibility and you're outbid frequently, consider decreasing bids for high-competition keywords.

Seasonality: If the keyword is seasonal and is underperforming during the off-season, reduce the bid or pause the keyword.

Wasted Spend on Irrelevant Traffic: Decrease bids for broad or irrelevant keywords that aren't converting well.

Keyword Cannibalization: Reduce bids on overlapping keywords with poor performance.

Irrelevant Clicks: If the keyword is attracting clicks that are not relevant to your product or service, decrease the bid.

By continually analyzing these factors, you can make informed decisions about when to decrease bids for underperforming keywords. This helps optimize your budget, improve the overall efficiency of your campaigns, and focus your efforts on keywords that deliver better returns.