Google AdWords - Survival Strategies When Bidding
Google AdWords - Survival Strategies When Bidding
Keyword auctions are fast moving, dynamic markets where the traffic, costs and revenues associated with each position vary continuously. Throw in the vagaries of the Google ad ranking system along with a few reporting limitations and bidding suddenly starts to look a lot like a lottery.
Fortunately, we've got some strategies that will put you back in the driver's seat and miles ahead of your competitors at the same time.
Generally speaking, the most common question newcomers have about bidding is "do I have to be in ad position 1 or 2 (on Google) to do any good?"
The answer is no... not unless your campaign is a branding exercise. Many advertisers find that ad positions in the middle of the pack between about three and six are profitable for targeted keywords. In fact, it's not uncommon to find those lower slots have a better ROI than the top positions.
That's not always the case obviously, so it pays to become familiar with the search behaviour patterns associated with your particular market. For example, classic yellow pages type advertisers can often benefit from a top ranking. Their typical customer tends to go for the first listing that catches their attention... they don't shop around.
On the other hand, there's evidence to suggest that the top positions in some consumer markets attract compulsive clickers who seldom convert into customers. That can be especially true for premium listings above the natural search results. And in business-to-business markets, a top position is often less important as business users tend to spend more time researching all the alternatives anyway.
It also pays to be aware of a hazard that lurks behind the number one position in many markets... the lunatic competitor who wants to own that spot at all costs. No sooner do you get yourself seated at the head of the table than you find yourself in a bidding war with this guy just to maintain the bragging rights.
A bidding war over any position is never a good idea and can be an expensive exercise if you wind up competing against automated bid management software programmed to maintain that position. The smart way to avoid those battles is to concentrate on finding keywords that have little competition, optimizing the the Quality Score of keywords that do have competition, and raising your conversion rate.
There is one recognised strategy that does rely on securing a top position however. The idea behind this strategy is simple. Bid aggressively at the launch of a new keyword to get a top ranking and demonstrate to Google that your ad can get great click-throughs when it's in a good position.
Of course, that may mean bidding at a level that is unprofitable in the short term. But the idea is, you're paying to establish a Quality Score that will be good enough to keep the ad in a competitive position later on, at a lower cost. You don't have to be in the number one position for this strategy to work, but you should aim to be in the top three if you can.
To get started, the cost-per-click recommended by the Google Traffic Estimator will always secure a position near the top and it will often be good enough for position one.
When your keyword has received 40 - 50 clicks, drop the maximum bid by about one third, and watch what happens. If it holds the original position or thereabouts, it's likely the strategy has worked and you are now out-ranking higher bidding competitors because of a better Quality Score.
If your ad position goes into free-fall, it's likely you've got a problem with a weak or declining click-thru-rate that you need to fix.
Remember, the bid discounting system will make sure you only pay as much as required to maintain any one position. But at the end of the day, this strategy still requires you to throw some money at a new keyword while you iron out the wrinkles.
After the launch phase, your strategy should change to reflect your overall campaign objective. In other articles in this series we've discussed how to calculate your maximum average bid target. This gives you an immediate advantage. Less sophisticated advertisers tend to bid the amount they 'think' they can afford, which is another way of saying that they're just guessing.
But it's important to understand that you shouldn't just bid your target average across the whole campaign. If you 'set it and forget it' you'll leave a lot of money on the table. It's okay to start out bidding at the Ad Group level but if you continue to bid the same for all keywords, you'll end up under-bidding on keywords that are converting well, and over-bidding on words that are converting poorly. So over time you need to track the performance of individual keywords, and bid accordingly. In practice, you'll probably find that most of your ad budget is spent on a relatively small number of keywords, so it makes sense to focus your attention on those terms.
I'll talk more about refining your bids in an article on performance analysis but in the meantime you might want to also think about some broader strategies.
For example, there's lot's of data to suggest that click through rates fall off dramatically after the first page of search results, so you could make it a rule to always bid high enough to make the first page. You might bid lower across the board for less targeted keywords. You might bid lower on keywords that target users still early in the buying cycle, and higher on those that target users ready to buy. And, you'll almost certainly want to bid lower on Content Network ads for the same reason.
Another article in this series makes reference to ad scheduling as a budget management tool, but it has a strategy aspect as well. A service based business like the local plumber might use scheduling to make sure his budget is only used during office hours but an e-commerce site can use it to target hours of the day when their market is more inclined to buy.
One success story using this tactic was reported at a recent Search Engine Strategies conference. The guys at internet retailer rugman.com found that they could double the click-through-rate on key phrases simply by turning their campaign off for 5 hours a day. What's more, their sales increased by 25% at the same time. It gets even better when you think about how that would improve their Quality Scores and reduce bid costs.
To help decide what hours of the day to target, use your Control Panel reporting tools to run an hourly report. Hourly reports provide data about your account for each hour across a 24 hour period. You might even want to consider Advanced Scheduling. In advanced mode, you can bid different prices on your ad at different times of the day using a multiplier. The multiplier raises or lowers your bid during the periods that you specify.
About the Author
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