How Much Should I Bid for a Keyword?

When it comes to AdWords, you want to be sure you’re incorporating relevant, conversion-driving keywords into your campaigns. It doesn’t make sense to bid on keywords that have little to do with your products or services, or those that are unlikely to help you achieve your marketing goals.

After deciding upon a list of keywords and engaging in other AdWords best practices, you need to decide how much to bid on your keywords. Google offers a variety of options to choose from, and the method you choose can dramatically affect the overall performance of your AdWords campaigns. Below are some of the many indicators of how much to spend:

Importance of Keyword

How much is the keyword worth to your business? For an e-commerce store whose best sellers are shoes, it doesn’t make sense to allocate most of the budget toward pants. Unless, of course, the goal of the AdWords campaign is to increase pant sales for the quarter. Estimating how much your business will profit from conversions derived from a particular keyword can help you determine its max CPC.


Naturally, the more competitive a keyword is, the more you will have to pay for your ad to be shown. Within the AdWords interface, you can modify your columns to display the estimated first-page bid and top-of-page bid for a given keyword. Be careful — before automatically bidding the amount it takes to appear on the first page, consider your daily budget. For example, if it costs, on average, $20 for your ad to be shown for “sunglasses”, and your daily budget is $25, it probably doesn’t make sense to spend that much on one keyword. Remember that one click may not necessarily result in a lead for your business.


After generating a sufficient amount of data, AdWords will allow you to use Conversion Optimizer — a tool that helps Google automatically bid to help you generate pre-determined conversions. If conversions are the ultimate goal, it definitely makes sense to at least consider Conversion Optimizer as a viable option.

To recap, how much you bid on a particular keyword depends on, among other factors, your budget, the importance of the keyword to your business, and also the competitiveness of the keyword. Whether you select manual or automatic bidding as your bid strategy, be sure to do your research and give it some significant thought.

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