Sometimes Google AdWords makes recommendations that look something like this:
This was taken from Google Places. Google’s recommendations may not be this same amount but the logic behind calculating how to get maximum value is the same. There are few ways to go about this. You can 1) ignore that recommendation and go on using your current bids, 2) trust Google and chose recommended amount, or 3) manually test suggested amounts and then go with your findings. If you chose the third option, this blog is for you.
To test Google’s suggestions you need some basic Excel skills. This is how I transferred mine into Excel:
To work with more than 3 suggestions, I used Excel to predict values using FORECAST function. Red Amount, Clicks1 and Clicks2 are forecasted predictions. Then I calculated Average clicks using Excel’s Average function and Cost per Click. This is what it looked like after forecasting:
The next best thing to do is to graph this to have a visual representation of what you’re looking at. I used a simple line graph in Excel with Average Clicks on X-axis and Cost per Clicks on y-axis.
When you look at the graph, it becomes apparent that at $1.04 cost/click the line offsets the most and the slope changes. Google’s recommendation is to invest $440 for best possible results to get an average of 427.5 click. However, this graph suggests that 135 clicks (or $140) is the tipping point. Anything over $140, with an average of 135 clicks, is a good investment and anything under it isn’t. Surely you’ll get the most bang for your money by investing more, because your cost per clicks goes down. And Google is not completely wrong in suggesting $440.
This method can be used in most cases to determine suggested values based on historical data.