PPC Bid Management-Step Three

Effective Bid Management - Step Three: Filter keywords that generate Conversions but Negative ROI or higher than your target CPA.

If your PPC account is structured keeping your business goals in mind and you have a solid keyword list in the account, you will only have a handful of keyword fitting this profile and for that matter only a handful of keywords converting in your account overall (80-20 rule always). Ask yourself questions:

Is the Max. CPC too high?
As a result is the Avg. Position too high and therefore generating a lot of junk traffic and bringing down your overall Conversion Rate?
What is the CPA or ROI goal and how does it compare to the CPA or ROI of the keyword?

Based on your business setting, use any formula you wish to use to adjust those bids. I personally tend to use the following two formulas the most:

(Target CPA/Actual CPA) X Current Max.CPC

OR

Target CPA X Conversion Rate

If You have an ROI goal, figure out what CPA value will help you achieve that goal and use the formula above to calculate bids.

It is advised that you base this decision on a large chunk of data.
Depending on your product/service, only a weeks worth of data might be enough for you to conduct this analysis due to the high volume of Impressions, Clicks, Cost, & Conversions.
Always keep track of your Ad Copy and Landing Page changes as that can effect conversions too.

Before making a decision to change the bids or pausing or deleting the keyword, find out if the keyword has always performed similarly. If the answer is Yes, then ask yourself:

Could it be due to Seasonality?
Could it be due to Increased Competition?
Could it be due to previous PPC Bid optimization (maybe a keyword was not converting as effectively, or bid was decreased or increased aggressively)?