Rvfamily
Well-Known Member
PPC Bidding Strategies
There are several different types of ad platforms, and each of them have somewhat unique methods/strategies for maximizing ROI. A good bidding strategy should be a key component in your campaign optimization.
Of these different types of platforms, they generally break down something like this (no PPV/CPV)
- CPM- cpm is where you bid per thousand impressions. You can pay different rates for these impressions. This is great if you have great copy/creatives (landing pages, banners, etc.). However, if your CTR's are not very good, you are paying per impression, regardless of whether or not you get clicks or conversions.
- Flat Rate- media buys at a flat rate per impression. Because you buy these impressions in bulk, you can get them at a discount. You might buy all of the impressions from a website that converts really well for you, as an example of scaling using this method.
- CPC/PPC- cost per click/pay per click. The focus of this guide.
Strategy 1-
Although you are paying on a cost per click basis, where the top bid should have top position (and thus generate the most traffic), this is not necessarily the case. Your position and by extension the amount and quality of the traffic you generate is determined by two variables:
- CPC (your bid)
- CTR (your click through rate)
This means is that even if you bid the top spot, but your click through rate is extremely low, you can find yourself getting less traffic and or lower quality traffic. It also means that if you have a high click through rate, you can effectively pay less per click than a competitor (with a lower CTR), while generating more/better traffic.
Let's take a look at one of my keyword sets from 7Search on a previous campaign as an example.
So let's do the math on the two keywords, supplement and outdoor sports. As we can see, for the keyword supplement, we had an avg. cpc of .08, a CTR of .41%, with 137 clicks.
If we take the number of clicks and multiply it by the avg. CPC, we get a spend of $10.96. Next take your spend and divide it by your number of impressions. In our case this rounds out to 3.28. We then divide 3.28 by 1000 to get our eCPM.
.08*137=10.96
10.96/33316=3.28
3.28/1000=.00328
eCPM= $0.00328
Next we look at outdoor sports. and it breaks down like this:
.05*4=.20
.20/77=.00259
.00259/1000=2.59
eCPM= $2.59
From these examples, we can clearly see that the keyword: outdoor sports would generate a much higher payout per 1000 impressions for the network. As such, we will get better placements and higher quality traffic, which theoretically would be more likely to convert.
So to maximize our ad spend, we need to make sure we have good creatives and ad copy that maximize our CTR. If by this process, you can effectively get cheaper, higher quality traffic, then this would be the first bidding strategy. I would suggest this article and this one as a good place to further your knowledge in the areas of headline/copywriting.
Strategy 2-
Test and create a map of the "sweet" or "soft" spot in bid prices, aka a bid map. The idea here is that if we look at bid prices on a vertical axis and number of impressions on a horizontal axis, we tend to think of it like this:
where as the amount of the bids increases, there is a direct correlation with an increase in the number of impressions we get. However, this is not the case. In actuality, there is a curve in this line where the "sweet" spot is to maximize ROI. Let's look at the graphic below:
What we see is that there is a point at which our return (in the increase in the number of impressions), relative to the increase in our bids, levels out. From the approximate point of the arrow upwards, we begin to see a decrease in efficiency that negatively affects ROI. This is the sweet spot we need to find.
We do this by measuring the amount of the bid, against the number of impressions over a set period of time, and working down the bid side of the axis while calculating the number of impressions we are getting.
For example:
I start with a bid above the current high bid, let's say here that we are looking at .30 as the top bid and I bid at or slightly above that level. I measure the number of impressions over a period of time (I'm using 7Search as my traffic source, and think 30 minutes is a good amount of time, depending on the keyword- however if you're using Adwords or something else that generates much higher volumes of traffic you will need to decrease the amount of time).
We will decrease our bid in the intervals we set out (30 minutes in our case), measuring the number of impressions against the amount of our bids. As the bids decrease, we'll see a decrease in the number of impressions. We can then plot these out on a piece of graph paper or in Excel to get a visual aid that shows us where we need to bid to maximize ROI.
Sometimes we can be in the number 2 or 3 spot and generate a better ROI, than if we were in the top spot. You won't know, unless you are tracking this information (or similar).
Strategy 3-
Test long tail vs. short tail keywords. Long tail keywords tend to have a lower CPC, but will not generally get as much traffic as short tail keywords.
Let's look at the suggestion tool from 7Search to get some ideas. Let's say you decide to promote an offer for car insurance. The most competitive bid is for the keywords "car insurance." Each click will cost us .66 for the top spot. However, if we come down to "car insurance rate," we see that we can get enough clicks to test our offer, but for less than 10% of what it would cost for the base keywords.
Some other strategies might be:
- to include location specific keywords (I would think big cities here, where you might find more people searching- Car insurance New York, or Car insurance Dallas for example)
- to add adjectives to your keywords to make them long tail- cheapest car insurance or best car insurance rates would be some examples
- to focus on keywords that are farther down the buyer funnel- where to get car insurance, for example
- combining these- where to get cheap car insurance Dallas for example.
Monitor and adjust your bids towards the end of each day or the end of each week. Let's say that your competitor is bidding .02 more than you for your number one keyword. And let's say that he has a daily budget of $20. He can reach a point in the day or week where his budget is maxed out, or he could cancel a campaign mid week because it doesn't seem to be working for him. If the two of you were 2 cents apart, and the next person below you is .04 down, then you can be paying 4 cents more per click than you need to.
I have played around with bids during the day and at times found that I could decrease my bids significantly at certain times and still maintain the top spot.
For example, I was bidding on keywords for surveys and had been bidding .19 per click for the top spot. During the evening, I started playing with the bids to see where everyone else was in the bidding hierarchy. As I adjusted my bids down, I was able to move it down to .13 and still maintain the the number one spot. I maintained that bid/position for almost 24 hours before I noticed I had been knocked out of the top spot.
This is certainly not a comprehensive guide for PPC bidding strategies, but I hope there is something here that can help you improve your CPC's and ROI.
Happy Bidding, and
As always
Here's to your success!
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You did a great job of explaining everything!
