Bidding Strategies - Key of Advertisement on Google

As of now we know that bidding is what decides fate of your PPC campaign. Now lets see what all aspect should be considered while bidding for keyword or key phrase. There are several PPC bidding strategies to apply. Each has its merit, and in some cases, may be more effective with one PPC search engine or with a set of terms. This is just not enough. There are different bidding strategies for Google and Yahoo! Their PPC programs are quite different and hence the bidding strategies also have to be different.

The bidding amount certainly depends on, how much you are willing to pay per click. If you don’t know this value then its better, you stop thinking of PPC advertising. This could be based on an industry rule of thumb or calculated based on internal factors such as profit margins.

For example, let's suppose you're bidding on the keyword phrase "search marketing" but do not know your max CPC. One way to estimate a max CPC involves taking the top 5 bids on Overture and computing the average. The current bids are: $0.51, $0.50, $0.33, $0.32, $0.31. The average is 39 cents. Use that as your max CPC to begin with.

The reverse calculation is very effective to determine how much we can spend per click. Reverse calculation means; calculate the amount to be investment on the basis of revenue you are generating from clicks. Past experience, market understanding and proper research will certainly help to calculate you CPC. Let's suppose you sell SEO package for Rs.100k and your profit margin is 20%. That leaves Rs.20k of profit for each package. Also, assume that your conversion rate will be 1%. For every 100 visitors from a PPC ad, you expect 1 sale. If you have Rs.5k of ad spend to spread over 100 visitors, you have Rs.50 to spend per click.

Also you can decide on it by calculating overall online marketing budgets. If you are willing to spend 10% of revenue on website then your total ad spend is Rs.10k. The conversion rate we have calculated is 1%. Therefore with 100 clicks in mind we can spend Rs.100 per click. As your campaign progresses and you determine your actual conversion rate, adjust the CPC accordingly.

You need to use different bidding strategies for Overture and Google as their programs are different. Google considers past performance and click through rate of the campaign whereas Overture only considers your bidding amount. For Google, use the Overture bids as your starting point in the short term and reduce the bids for the long term if your CTR is high enough.

Biding for a position gives you more CTR and not the number one position. By this you can get higher ROI since top positions are very expensive. Just think of searcher’s behavior. They don’t have any specific query in their mind but they use different combinations of keywords they can think of. Bidding has phenomenon that there are always some big gaps in between the bidding amounts. This is again because of race to reach to the top position. Consider a bidding scenario where biding started at the price of Rs.10. Someone else will bid Rs.11 again someone will bid Rs.12. But the point will certainly come when some aggressive bidder will bid on Rs.30 to obtain the top position without any fear of competition. This gap between Rs.12 and Rs.30 will be beneficial for us.

If you are concern about the first position only then initially bid higher and achieve it, which is very easy to do in Overture. And then by constant monitoring the biding you can maintain the top position. On generic keywords it is very difficult to monitor the campaign constantly as they are popular and high traffic terms. But you can do it on specific keywords, which are comparatively less competitive with higher conversion rate.

If you are biding on very specific keywords, which have less competition and low traffic, then one option is, position the advert and rely on the visitors. This strategy can be considered because, one who will search into such a specific query, he is keenly looking for that particular information.

Sometimes you bid relative to your direct competitor's offerings and listings. If you find your direct competitor at position 3 and you have a better offering for this particular search query, bid just above your competitor, but not necessarily at the top position, thus engaging the searcher's attention with a compelling ad. Terms in this category fall into Quadrants 1 and 2 depending on how compelling the offer is once the searcher have landed on your web site. The bidding strategy works well for price and feature competitive offerings.