Using Geographic Bid Modifiers in AdWords

Now that we all live in a new world – the world of Enhanced campaigns, I’d like to discuss one of the more significant new features: geographical targeting using bid modifiers. You may be wondering: “How is this any different from targeting campaigns to specific geo-targets as we’ve done before?” Well, the ability to geo-target has not changed, but we now have the ability to bid differently based on geo-target within the same campaign.

Previously, if you wanted to bid differently on distinct states, regions, or countries you would have to set up new campaigns for every geo-target.  This often resulted in a time-intensive process and a large number of campaigns making tasks such as ad copy testing, adding new keywords, and L/P testing more difficult and time consuming.  Geo bid modifiers remove this headache!

How To Determine Geographic Bid Modifiers?

We LOVE data – so that’s what we will use to determine our geo bid modifiers. The Geographic report in the Dimensions tab will show us performance at the country/territory, region, metro area, city and zip code level. Keep in mind that you will need enough data so in most cases we will analyze data at the country or state level. Depending on a client’s primary goal we will either use ROI (for B2C clients) or CPA (for B2B clients) to assess performance. We will identify which locations perform above average, and those will receive a positive geo bid modifier. We will also identify locations that perform below average, and those will receive a negative geo bid modifier.

For example, one of my clients has an ROI goal of 5.  I’ve pulled data from the geographic report for their largest campaign which targets the US & Canada.

In green, I’ve highlighted states that perform at least 20% above my ROI goal.  In red, I’ve highlighted states that perform 20% below my ROI goal.  For the strong performing states, I’ll apply a bid modifier of  +15%.  That means if my Maximum CPC bid is set to $1.00 for a specific keyword, the Maximum CPC for Washington state becomes $1.15. Alternatively, I will apply a bid modifier of -15% for under performing states to reduce costs and hopefully increase ROI. Basically we are looking for opportunities to increase exposure in locations that have historically performed well, and decrease spend in locations which have historically under-performed.  I often start out conservatively with 10%-15% geographic bid modifiers, but that can vary depending on a particular client’s goals.

How to Apply Geographic Bid Modifiers

Now that you’ve determined the geo bid multiplier adjustments, you can add these under Settings –> Locations. This is what it looks like in AdWords:

Two things to keep in mind:
1. You need to add all states/regions in order to still show ads in those locations (you would just leave the Bid. Adj. column blank).
2. If you are making mass changes to several campaigns, you can do this quickly in AdWords Editor.

In certain cases, we use a client’s back-end data to geo-target using geo bid modifiers. This is especially helpful for B2B clients who can provide lead quality data based on location.

But it doesn’t end here! We will continue to analyze the data going forward and make adjustments to those geo bid multipliers based on the new data.  Is ROI still low for Georgia? We’ll adjust down more aggressively with a -25% bid modifier.  Or are we still hitting an ROI of 6.9 for Ohio? Then let’s apply a more aggressive bid modifier to increase bids.   Bid modifiers should be treated like normal keyword bids: something that changes with performance, rather than a static setting.

The Nitty-Gritty – Don’t Forget to add a Catch-All Geo-Target!

Make sure to add a catch-all geo-target for the larger area you are targeting. We’ve noticed that impressions and click traffic can drop off when adding only geo-targets and not including the larger area. We’ve addressed this by adding a catch-all target (think of this like using All Products as a back-up product target for well-segmented PLA campaigns). For example, when adding all 50 individual states as geo-targets, a best practice is to also include the United States as a target with a -15% bid modifier.

We can’t confirm the exact reason some traffic isn’t being captured at the state level; it’s likely that AdWords is unable to track all locations with precise accuracy. However, by adding the US as a catch-all and setting a lower geo bid multiplier, we can capture that missing traffic  Based on limited testing, that missing traffic can range from 0.5%-3.0% of overall traffic.

Overall, geographic bid modifiers provide us with the opportunity to use more granular bidding to drive greater efficiency and more conversions. There are some valid concerns about the multitude of bid modifiers changing the bidding landscape and process, but these new tools are worth testing and we would love to hear how others are using geographic bid modifiers.