adwords: the art of developing a bidding strategy based on match type

There are three different match types you can use in Ad groups while creating keywords. Each of these match types uses different strategies to match your ads to the user search queries. This also could mean that the users that clicks on the ad will have different conversion rates depending on the match type.

The match types are essentially a parameter that can be used to further segment your visitors to find the highest converting set of users. This also allows you develop a bidding strategy based on the matching type and the conversion rate for the same or similar keywords within an ad group. There are no right or wrong way to bid for each keyword. It will be unique to your ad group and will depend mainly on the conversion rate of the keyword and the match type.

The strategy is simple: Pay the most to the segment that converts better while keeping the overall budget about the same. The first step is to find out which of the match type converts the best in your case.

In most cases, your conversion rate will be the highest for the Exact match type, followed by the Phrase match and the Broad match being the lowest. It could be different in your case, but very unlikely. We will assume that this is case for the rest of this post. If it differs for you, it should not be a big deal to adapt this strategy for your particular case.

You can start out with the same bid amount for each of the match types and then start tweaking them as you have more data for the conversion rates. You can also save some time by assuming that the general rule will hold true in your case: the exact match type being the highest and broad match being the lowest.

First you need to come up with the highest price you want to pay for a click. This is the price you would pay for a click that converts very well for you. From here, we will work with the rule of halves for the other match types …

Exact Match Type

We are assuming that the keyword you have created, accurately targets the ideal search query that best fits your ad and what you are advertising for. Now, you should bid the highest amount for the exact match type. This is the highest amount you can afford assuming that the click will convert and generate revenue.

Let’s suppose that we bid 2 dollars for this keyword and match type. This is just an example and we will work with this example for the other types. It goes without saying that the bid amounts does not have to be exact, but just close enough.

Phrase Match Type

The next type is the phrase match type which is supposed to convert well, but probably not as much as the exact match type. By the rule of half, we will now bid half of the exact bid amount for this type.

So, the bid amount for phrase match is 1 USD.

Broad Match Type

This match type is usually the least converting type, but will usually have the most impressions and possibly the most clicks. We will bid half of the phrase bid amount for this. That means, you will be bidding 50 cents for this.

Adwords match type bid strategy

The above is just one example of a bidding strategy based on the match type. As mentioned, it follows the rule of half (ie. a division factor of 2). You can modify it further to suit your needs. You can use any factor such as 3 or 4 if you want to bring the overall budget down.

An even better idea will be to calculate the factor based on the actual relative conversion rate, but it can get a little more complicated. Unless you are dealing with a very high budget, a difference in factor of less 20 or 30 percent or so does not matter.