The Need For Bid Management
The Need For Bid ManagementDec 13 2006 - Advertising - Farhad Divecha
As the pay per click advertising industry matures, more advertisers enter the marketplace and vie for limited screen space. The prime positions for all pay per click advertising are the top 3 sponsored listings on the Google search results pages, followed by the remaining listings on the right hand side of the first page.
The very nature of pay per click advertising based on a bidding system implies that as competition intensifies advertisers must either pay more or get smarter with their bidding practices. This is where the need for PPC Management comes in.
Smarter bidding on Google AdWords
Google AdWords works on a rather complicated algorithm that considers a series of factors when deciding the cost per click and position of every ad that is show for every keyword searched. Increasing the quality score of all Ad Groups, keywords and campaigns in the account will help reduce the cost per click to a considerable extent.
Advertisers, however, are no longer willing to pay for just traffic. They pay for conversions. In a market where CPC bid prices are continuously rising, in spite of the best attempts at improving campaign quality, it becomes extremely important to keep sight of advertising objectives and profitability goals.
Google AdWords is not the only search engine advertising platform that requires smart bidding. A previous Articles article discussed competitive bidding on Yahoo!
Taking this one step further, it is easy to see the need for a smarter bidding / pricing approach across all marketing campaigns, online and offline.
Functions of bid management software
Bid management systems at the core are campaign management tools that allow advertisers to set specific targets and then bid to achieve these targets. The target can be a specific position or an ROI or even a target market. Typical bid management functions include:
- Budget management
- Ad position check
- Competitor tracking
- Bid check and review
- ROI tracking
- CPA management
In the past, advertisers often got carried away with bidding wars for the top 3 positions on Google and Yahoo! without paying attention to costs. Year-end reviews started showing that over-enthusiastic bidding had ended up eating into profit margins, especially for FMCG goods and lower-priced commodities.
Sophisticated bid management systems allow advertisers to set ROI goals and cost information. Keyword bids are then managed so that advertisers do not end up paying for a click more than what it’s worth.
Next generation bid management solutions
In an ideal world, bid management systems would work just like modern-day stock trading system that can identify an investor’s portfolio strategy and buy and sell shares to maintain the highest return within specified risk levels. The newest generation of bid management systems have taken this portfolio management approach and might prove to be superior.
For now, the best solution for most advertisers is to devise an advertising strategy based on definite, quantifiable goals and then work with a bid management system to ensure that campaigns are run within the parameters determined by these goals. Using a good PPC management agency is often crucial to determining, setting and managing these goals and the paid search advertising campaign.