Google Bid Simulator: Coulda, Woulda, Shoulda

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brando_smallADOTAS – Not long ago Google formally released the Bid Simulator tool from beta to the general public inside of the AdWords interface. If you manage paid search for your company or client, you will simply love Bid Simulator.

After using this tool, you will certainly start talking to yourself saying, “I ‘shoulda’ raised my bids by X and ‘coulda’ had much more customers which ‘woulda’ made me a lot more money.”

Bid Simulator is a tool that helps paid search advertisers make informed and efficient bid management decisions by estimating the results they “coulda” achieved using hypothetical bid values. The key word here is “coulda.” In short, this new tool allows paid search advertisers to explore what “coulda” happened if they had set different maximum bids (e.g. $0.50 to say $0.55 or $0.60).

How Does It Work?

The Bid Simulator applies paid search data from the past seven days to essentially re-run the auction with actual data (competitor bids, for example) at different target bids, and then re-calculates the number of impressions the paid search advertisement “coulda” had if you selected a different maximum cost per click (CPC). In addition, the Bid Simulator tells you how many clicks your ad “coulda” had for those impressions and how much those simulated clicks “shoulda” cost.

If I Woulda Known

For example, if your maximum CPC was $0.50, the Bid Simulator shows you what results “coulda” happened at say $0.25 and $0.75. This type of keyword-level transparency gives advertisers the insight to make more informed bidding decisions to meet campaign objectives.

With this data advertisers can appreciate how much traffic they “coulda” received at specific cost per clicks. For advertisers tracking leads and sales (not just clicks), now understand diminishing returns or campaign efficiency arguments.

Without Bid Simulator it was very difficult for most advertisers to model or predict the impressions and clicks their campaigns “coulda” received if they used different maximum cost per clicks.

More Sophisticated Than the Traffic Estimator

The Bid Simulator is not a cool version of Google’s Traffic Estimator. The Traffic Estimator tool provides estimates of traffic based on patterns that originate across all advertisers. The Traffic Estimator helps in situations when a campaign does not exist and you need to get an idea of traffic vs. budget.

In contrast Bid Simulator makes estimates based on your specific campaign data as well as that of competitors including but not limited to your Quality Score and the keyword-level queries (match type) that applied to your keywords.

I Coulda Made a Fortune

As we all know from the value in our 401k plans over the past few years, “past performance does not guarantee future results.” Hence, don’t bet the family farm on the data. Nonetheless, this type of data helps provide even the smallest advertiser with transparency previously only available to large advertisers that developed predictive models or portfolio management techniques such as efficient frontier models.

Like Google Search Funnels discussed a few months back, this is a huge step forward for AdWords advertisers.

Needa More Info

Google has recently launched a video on Bid Simulator and this is hosted on YouTube:

In June WebMetro gave a presentation on how to build your own forecasting tool using Bid Simulator during the Amazing PPC Tactics session at SMX Advanced in Seattle. You can download this presentation at no-cost or obligation.

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