Every word has a cost when it comes to online paid search advertising. For example, when you search for “dentist near me” in Google the first options you see are paid listings (or ads) that the dental practices paid for through a bidding system in Google Ads.
How does bidding work?
The cost of dental keywords in platforms like Google Ads or Bing Ads is driven by advertisers. Dentists bid on the perceived value of words that users search in what could be described as a modified auction system. If a dentist bids between $25 and $50 on those keywords, it would drive the cost up from $20 to $50 for all dentists bidding on the same words.
Bids on popular dental keywords can become expensive. However, consider how much would you be willing to pay for keywords such as “dentists near me” or “dental implants”? Have you ever thought of the potential gain from someone clicking on your listing rather than focusing entirely on the cost? How would you evaluate what a keyword is worth to your practice?
What are the bidding strategies?
The bidding strategy behind prices is linked to attracting the right click from the right user, however, keywords are not the only converting factor that drives patients to a practice. While keyword bidding should match the business objective, it is important to understand the impact of positive and negative keywords that may impact the outcome.
Some keywords hold more value than others. Negative keywords, when used properly, strengthen the return on ad spend by not showing ads to people who won’t click, underperform or price-sensitive users. However, the most valuable strategies that maximize spend and clicks, and optimize audiences are automated. Some of these strategies can include a keyword that may need up to 10,000 bids to meet performance goals.
Bid strategies that may support your goals include:
- Manual CPC (Cost-per-Click): This strategy gives you the most control- you set the maximum bid amount, per click, at the keyword, ad group or campaign level.
- Enhanced CPC: For this strategy, you set the maximum average CPC you’re willing to pay. Then, Google Ads takes over, automatically raising your bids up and down to maximize conversions while still keeping the average CPC at your limit.
- CPA Bidding (Cost per Action or Cost per Acquisition): CPA measures how much ad budget it takes to get a conversion. Google’s Target CPA strategy adjusts your bidding to get you as many conversions as possible at or below your desired CPA.
- Maximizing clicks/search page location/target outrank: Search Engine Land contributor Frederick Vallaeys calls these “vanity bidding,” because they’re more about generating raw traffic and brand awareness than they are about feeding your bottom line.
- Return on Ad Spend (ROAS): Return on Ad Spend is usually expressed as a percentage, and the formula for calculating it is simple: ROAS = Revenue from Advertising/Cost of Advertising x 100. That said, optimizing for ROAS does require more in-depth analysis. You need to understand not only which keywords are converting well, but also which keywords are generating the most production value.
- Smart Bidding: Smart Bidding is an automated strategy that focuses on value and optimization metrics at every auction. The strategy uses a combination of machine learning and signal data from a user such as device type, location, and audience to measure campaign performance over a longer period and then optimize. Examples of Smart Bidding strategies are Enhanced CPC, Target CPA, Maximize Conversions and Target ROAS.
Bid for conversion
The goal of a bid strategy is to get the right click from the right user, resulting in a conversion. Performance is evaluated on historical data such as keywords, conversions, trends, and ad groups. It’s important to align business outcomes with the lifetime value (LTV) a patient that clicks brings to the practice, which will deliver Return on Ad Spend (ROAS).
A good example of how to understand bidding to attract quality lifetime value through a ROAS campaign is like this: While a click or bid may cost $20, a patient may schedule a procedure four times that conversion cost (ROAS), and return for further treatments (LTV).
If a patient clicks, converts, returns, and repeats this pattern over a set number of weeks, years or decades, the LTV of the user’s click outperforms the original cost of the bid, resulting in a quality lead.
Evaluate Ad Spend to patient lifetime value
Knowing the cost-per-click and the lifetime value of a patient that contributes toward a practice’s revenue stream steers the bidding strategy. In digital advertising, the outcome of the two is called Return On Ad Spend, or ROAS, which measures the effectiveness of a paid advertising campaign.
ROAS is a preferred method of working out revenue when it comes to patient conversion value. This is due to conversions resulting in different quantities of income for a practice depending on who the patient is, what procedures they need and the frequency of dental visits. An example of ROAS is 1:1.4, which means $1 spent on advertising for every $1.40 earned in revenue.
Practices can capitalize on ROAS and LTV if dentists review their own patient lifetime value. The greatest influence on LTV is the patient’s geography, the type of services offered at the practice, and the dentist’s online paid advertising strategy. On average, LTV is estimated at $10,000 to $20,000 per patient over two decades. This value varies from practice-to-practice given the factors that influence a patient’s awareness of the practice, treatment, and frequency of visits.
Work out your patient LTV
To better understand the lifetime value of patient, a hypothetical example based on averages can be calculated using:
- The number of years of your average patient.
- The annual, average revenue of a procedure, considering frequency.
- The additional value created from a patient’s referrals to the practice.
As an example, and based on a practice’s average patient being a customer for 10 years, imagine that every year, depending on frequency, the patient typically generates an annual revenue for the practice of $800 per annum. On average, a patient also brings in two referrals who produce an annual revenue of $800 each. In conclusion, the average patient at the dental practice delivers a lifetime value of $16,000.
Annual dental care revenue of one patient per year: $800
Multiplied by average years a patient is at practice: x 10
Sub-total revenue for dental practice of one patient: $8,000
Multiplied by average number of patient referrals: x 2
Total lifetime value per patient $16,000
Set-up a bid strategy
Now that you’ve set up conversion tracking, added keywords and negative keywords and created a campaign to generate some data, here’s how to set-up a bid strategy in Google Ads.
- Open Google Ads.
- Select the campaign that will use the strategy.
- Go to “Settings.”
- Scroll down to “Bid Strategy”.
- Select or name a bid strategy.
- Scroll to “Daily Budget”.
- Enter a budget or use a shared budget.
- Complete any other campaign setting choices.
- Hit “Save and continue”.
Get started with a ROAS campaign
Google recommends a target based on historical data. Setting it too high can limit the amount of traffic you get, but for most campaigns, start with at least 400%. Here’s how to target your campaign for ROAS.
- Open Google Ads.
- Select the campaign you want to use this strategy with.
- Go to “Settings.”
- Scroll down to “Bid Strategy” and click “Edit.”
- Click on “Change Bid Strategy.”
- Select “Target ROAS.”
- Enter your target ROAS as a percentage.
- Save the campaign.
Next steps for a dental practice
As the leaders in dental marketing, Conversion Whale are experts in growing dental practices through paid advertising that is results-driven and patient-approved, so your marketing dollars are spent efficiently.
If you’re interested in seeing real results and real value for every dollar spent in your next online campaign, contact us for a bidding strategy review. Contact us.