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What is bid optimisation?

What is bid optimisation?

Bid optimisation is something I am very passionate about, and something I talk to people about every day. Unfortunately, it is a very poorly understood area of digital marketing and is often confused with other marketing techniques or technologies.

If you are unsure of exactly what bid optimisation is or struggle with differentiating bid optimisation from other marketing technologies such as programmatic buying, landing page optimisation or search engine optimisation then this post is for you!

First, let’s briefly cover some marketing buzzwords that are often misunderstood to see where bid optimisation fits in:

Programmatic buying

Programmatic buying is the process of purchasing advertising space automatically based on rules and preferences. For people who have advertisements with Google or Bing this is nothing new. However, it is a hot topic at the moment because Ad Exchanges, like AppNexus, and other display advertising networks have adopted this approach with great success. Bid optimisation can help improve the results of your programmatic buying campaigns.

Search engine optimisation

Most search engines provide free (also known as organic) and paid listings. Organic listings are ranked based on relevance to the words and phrases that the user entered when searching. Search engine optimisation aims to make your website more relevant for distinct words and phrases. Bid optimisation helps you get more value from paid listings without impacting organic listings.

Landing page optimisation

Your landing page is the web page that your visitors arrive at after clicking on an ad from one of your campaigns. Landing page optimisation is the process of making changes to those pages to increase the chances that visitors will proceed to purchase or complete some other conversion on your website. With a better landing page, bid optimisation can help you get more conversions for less cost.

So now you know what some of these terms are and how bid optimisation impacts them, but what is bid optimisation?

Bid optimisation

Most forms of paid digital marketing use an auction model where advertisers compete against each other to display their ads to a desired audience. Each advertiser nominates a bid that represents the maximum amount of money they are willing to pay for the auction. The advertising platform either uses the bid amount alone or a combination of factors to determine which ads are displayed and in what order.

The ideal bid price for any auction is one that ensures an ad will get a high enough position, or enough exposure, to attract valuable clicks or impressions. However, it is important that the bid is low enough that the cost does not erode the benefit that those clicks and impressions deliver.

Finding that balance between cost and returns sounds simple enough, but in reality there is a multitude of factors that impact each auction and it is not humanly possible to keep on top of all of them. Here are just a few factors that can change the nature of the auction and affect your ideal bid:

  • Changes in competition as a result of other advertisers changing bids, budgets, keywords, audiences, ad creative and almost any other setting on their accounts. One change can have a significant impact on the auction.
  • Changes due to seasonality; for example an increase in warm clothes purchases leading up to winter. While these changes often happen over weeks, there are plenty of cases where significant changes can occur within hours or minutes.
  • Events, news and trends can have a tremendous impact. For example, as people see a product promoted or endorsed by traditional or social media there may be a very sudden increase in those researching or purchasing.
  • Ad platforms can modify the auction based on quality or performance data and, depending on the ad platform, this can be re-calculated for each and every auction.

With the nature and frequency of these changes, it is rare for the ideal bid for an advertiser to remain the same for more than a few minutes. In fact, there are likely to be significant changes in the ideal bid day-to-day.

Keeping up with these changes for a single marketing campaign can be a full-time job for a team of marketers, as they need to download constantly, evaluate, re-calculate and update their bids. Hiring enough staff to manage all your marketing campaigns in this way is simply not feasible. As a result, many businesses compromise by making changes less frequently and making generalisations so that they can make one change to a large group of similar bids.

It’s situations like these where bid optimisation becomes a vital tool for your digital marketing campaigns. Using this type of technology you can specify your definition of the ideal bid and the technology will to the manual work of downloading, evaluating, re-calculating, and updating your bids.

For example, you have an ad campaign focused on leads and you want to achieve as many leads as possible and maintain a cost per acquisition (CPA) of $10 or lower. Bid optimisation technology can take your requirements and evaluate each bid in your campaign, identifying the ideal bid based on the data available.

Bid optimisation technology can perform this function for millions of bids within seconds, meaning you no longer have to compromise by making generalisations or updating less frequently. The technology can make changes as often as required, making your bids much more competitive and optimal than your competitors.

This increased efficiency will enable your marketing staff to focus on areas of marketing that humans are much better at such as developing strategy, ad creative, landing page optimisation and more. These small changes to your bids can make an enormous difference over time. At Metrixa, we regularly see around 70 percent improvements in performance within just a few months of implementing bid optimisation technology for a marketing campaign.

Everyone at Metrixa is passionate about bid optimisation and get really excited when we can see the performance improvements our clients are achieving. Talk to us today about how to get more from your marketing campaigns with bid optimisation. Try our AdWords Audit.

Find me on Twitter @nathan5ri