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Considerations for Successful Bidding on Microsoft Advertising

As Google and Microsoft have evolved through the years, both have found ways to identify users and bid more efficiently. They’ve grown to incorporate signals that only they as the search engine know about a user and can use those signals in combination to identify the right bid for the right person, rather than layering bid modifier on top of bid modifier to determine a good, but imperfect, bid estimation.

Many practitioners lump Microsoft in with their Google bidding approaches, but the unique nature of each engine warrants a distinct strategy for Microsoft. As mentioned, Microsoft knows attributes and behaviors about its searchers that Google can’t know; to take advantage of that knowledge, marketers need to revisit their Microsoft bid strategies as unique entities. Microsoft offers several options to choose from, from enhanced CPCs (eCPCs) to in-engine bid strategies.

There’s no better time to test than now, especially given recent advancements in Microsoft bidding capabilities - advertisers now have the ability to target impression share in bidding and the ability to create similar audiences in order to better identify searchers. Additionally, portfolio bidding is now in beta and will allow advertisers to group multiple campaigns together to work toward one goal.

Let’s walk through considerations for each option, along with some performance snapshots from Merkle testing into Microsoft’s various bidding strategies.

Microsoft eCPCs with External Bidding

As of April 2021, all existing search, shopping, and Dynamic Search Ads campaigns without Microsoft automated bid strategies in place were automatically migrated to eCPC. While users can no longer opt out of using eCPC, they can make changes to maximize eCPC’s performance.

One way to optimize eCPC performance is to use it in combination with an external bidding platform. Overall, Merkle teams that tested eCPCs have found positive results from using it in conjunction with external bid tech. In the example below, one team saw improvements across click-through rate (CTR), conversion rate (CVR), and ROAS on Microsoft after implementing eCPCs.

ecpc test results

To ensure that your campaigns are seeing the best possible performance with eCPCs, it’s recommended to have UET tags applied to your Microsoft Ads account. As mentioned previously, Microsoft has several internal and contextual signals that outside bid technology cannot see or incorporate. However, the most robust set of signals require UET tag implementation in order to be recorded. In addition to unlocking the full suite of auto-bidding features, the tag will also tell your campaigns which keywords are converting and serve as a remarketing tag, allowing you to customize bids for people who have previously visited your site.

Testing Microsoft Ads Bid Strategies

Outside of eCPC, Microsoft currently offers the following bid strategies: max clicks, max conversions, target impression share, target ROAS, and target CPA. Before switching over to automated bidding in engine, be sure to run tests across portions of your account to measure a bid strategy’s effectiveness against current bidding methods. Consider how you want to structure your test and how you plan on assessing performance at its conclusion.

The recommended option for testing is utilizing campaign experiments in Microsoft Ads to set up an A/A test. Using this set up will control variables while producing a strong readout from the results. Another option is running a pre/post test across specific test categories and monitoring performance over the given testing timeframe. At the test’s conclusion, a time series analysis can be run to measure KPI trends before and after switching to the new bid strategy. This methodology is not able to control for variables as effectively but can still produce strong results if managed properly.

There are a few caveats search advertisers should take note of when switching over to in-engine bid strategies.

There will be a learning period. Like other bid technology, there will be an initial learning phase where your bid strategy will learn how your ads and bids are performing. As more data becomes available, the strategy will continue to fine tune your bids to make the most impact. This process can take up to two weeks and performance may be volatile during that timeframe. In order to minimize the volatility, it is recommended that any changes that need to be made are very gradual changes (+/- 10 to 20%) and only take place after the first week. It can be easy to grow impatient and prematurely analyze your test results but if possible, refrain from making hasty decisions. Plan for your test to take at least four weeks (ideally longer) to account for the learning period and exclude the learning period from your analysis for more accurate results.

Portfolio bidding is currently limited. Portfolio bidding is currently in its beta phase. As such, there are some features from other platforms’ bid strategies you won’t currently find in Microsoft. Campaign-level target overrides and ad group overrides are currently unsupported, but the good news is that seasonality adjustments are slated for pilot in Q4 of 2021!

Limited reporting. We’re unable to see overall bid strategy health metrics that other technology currently includes, such as optimal cost and conversion delay.

Bid strategies optimize to the set Microsoft conversion tag. If performance is typically measured via an internal attribution model, and not the Microsoft conversion model, then consider bid strategy performance more directionally and partner it with any other reporting data to determine success and optimize.

Merkle Case Studies

Below are a few success stories from teams that saw positive performance from switching over to Microsoft in-engine bid strategies.

Target ROAS Bid Strategy

This team split their search and shopping programs each into control and test categories (with traffic and revenue split evenly across the two groups). The test categories were run on tROAS bid strategies for 6 weeks to gauge how spend and return were impacted.

Both test groups saw positive changes in performance, with the shopping test producing stronger ROAS through CPC improvements and the search test generating a significant increase in revenue.

troas shopping test results

troas text test results

Impression Share Bid Strategy

Another team ran a pre/post for four weeks across a high traffic, low risk campaign. The first week was dedicated to bid strategy learning, the second week was used to make changes, and the final two weeks were reserved for testing the bid strategy.

CPCs declined almost immediately and remained that way throughout the test. Impression share remained above 90%, seeing slight gains over the course of the test. ROAS also improved slightly due to the savings from cheaper CPCs.

imp share shopping test results

imp share text test results

Conclusion

In order to fully optimize performance in search, marketers must approach Microsoft bidding with an engine-specific strategy. Whether your goal is to maximize clicks, hit a particular ROAS, or reach a certain level of impression share, there’s a bid strategy that can work for most types of campaigns. Microsoft continues to evolve their offerings, so keeping an eye out for new bidding capabilities and ensuring that the UET tag is applied can further improve your campaign performance. And if you’re not yet using Microsoft bid strategies, revisit the options available to you and consider testing with one of the methods outlined above to ensure that you’re not missing out on any potential opportunities.

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