Search engine pay per click (otherwise known as PPC) bid auctions are a dynamic environment, with a large number of factors that are brought together every time someone searches on a search engine.
Choosing the ideal bid for a particular keyword or ad group requires thought, planning, and data. This post shares a few insights into selecting the best bids, and avoiding some traps that can negatively impact your campaigns.
It’s important to remember that your bid is only one factor that affects your success in PPC bid auctions. Your keywords and targeting options should all be highly relevant to your brand, products and services. You should also be using every possible ad extension available to you, as this not only increases the value of your ad for consumers but also gives you a boost in the auction.
Additionally, your ad creative, landing pages, and conversion funnels should all be designed to increase your conversion rate and filter out unwanted clicks with negative targeting options. After all, there is little point in paying for clicks that you know won’t convert. All of your bidding focus should be on attracting clicks that have the highest chance of conversion.
How do you succeed in PPC auctions? Well, it’s going to be slightly different for each case, but below is some general advice that everyone advertising using PPC should follow.
Ok, so this might seem like a pretty obvious statement, but it is worth highlighting because it does happen a lot more than you might think. If you are receiving traffic but it’s costing more than the value of sales, leads or other conversion goals you are gaining, then you are overbidding. Worse still, your marketing campaign is costing your business money and isn’t providing a positive return on that investment.
PPC auction systems work in such a way that the highest bidder only has to outbid the next highest competitor to reach the top position. This type of system is called a second price auction. A second price auction system means if your maximum CPC (cost per click) bid is $10 and you only need $5.01 to win; you will only pay $5.01. CPC is the maximum amount you are willing to pay for a click for a given ad group or keywords. Your maximum CPC represents how you place a bid in a PPC auction. You can also use other mechanisms such as Cost per Thousand Impressions (CPM) or Cost per Acquisition (CPA), but we’re focusing on CPC in this article.
However, setting an extremely high CPC bid does open your campaign to some risk as your costs could blow out your budget if competition increases, even temporarily.
Under-bidding can be a bigger problem than over-bidding, and often advertisers who underbid don’t even realise just how much their campaign performance is suffering.
Underbidding has the distinct disadvantage of losing market share to your competition, but there is another danger:
Underbidding results in low click-through-rate (CTR) and quality score, which decreases the ranking your advertisement receives. Google calls this AdRank, and it is generated using a combination of variables, including your PPC bid, a quality score, your click through rate, and other factors. The higher your ranking, the better the position in which your ad will display.
The outcome is that you need to pay more per click than you would have if you were bidding a little more competitively, and unless you increase your bids, your ads will appear in lower positions. This cycle can continue until your ads no longer meet the minimum required first-page bid and are no longer seen by anyone.
How to win
Right, so this might seem obvious (again), but the key to PPC success is to bid to the point where you get the most return-on-investment. Positive ROI is where your ads are generating as much traffic as possible and not eating away at all of the profit that your sales are making. Success may not always mean position 1, but most advertisers see their peak ROI on high-quality keywords with an average position between 1 and 3, which are above the fold on the first page of search results.
To find the ideal bid price, you should constantly be evaluating the return-on-investment you gain from each keyword, the competition on that keyword, and any changing trends in user behaviour. Constantly evaluating all of these things can be a very time-consuming process, especially if you have a large account that may have hundreds or even thousands of keywords.
This is where automated solutions come out to play. These solutions can make changes, and update your bid values based on a variety of factors, including ROI. Using an automated solution enables your bids to be continuously updated, allowing you to outmanoeuvre your competition without the time-consuming manual labour.
The next step is to conduct conversion rate optimisation (CRO) and make improvements to increase the conversion rate you get from your traffic. By improving landing pages, conversion funnels, product or service offers and more, you can increase the average revenue that your company gets from each click. This increases your ROI, improves your quality score (which also reduces your bid cost) and puts you in a better position to compete for traffic against competitors.
The combination of proper account structure, competitive bidding, and optimised conversion funnels is how your company can outperform and outbid your competitors in PPC auctions.
Whether you are looking for PPC bid management, account management and optimisation, or conversion rate optimisation, Metrixa is here to help. Our unique combination of savvy marketing professionals and intelligent bid optimisation technology ensures your campaigns perform at their best. Try our Free AdWords Audit.
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