Effective Keyword Bidding Strategies

When doing Pay Per Click Advertising you'll often see "Bid Gaps" emerge among the cost per clicks of the keywords you're bidding on. For example, the top three positions for the keyword "Mortgage" may be listed as:

Position # 1 $1.00
Position # 2 $.79
Position # 3 $.78

In this example the advertiser in the #1 position is overpaying for their traffic. They could lower their bid to $.80 and still maintain their #1 position, while saving $.20 on each click.

Why Bid Gaps Appear:

Often times advertisers in the top position want to put distance between themselves and their competition to avoid having to check each day to see if they're still in the #1 position. Sometimes when companies upload keywords into their Pay Per Click Advertising program they set all their bids to the same amount, regardless of where their competitors have set their bids.

The most common reason why some PPC advertisers create "Bid Gaps" and overpay for their clicks is they're not aware of the tools available from third party vendors, or the PPC Search Engines themselves to avoid these gaps.

Eliminating "Bid Gaps":

Some Search Engines like Google automatically eliminate "Bid Gaps" by ranking ads using a combination of click through rate, and the maximum bid established by the advertiser. Google claims this allows them to offer advertisers the best ranking on the page at the lowest cost, while guaranteeing the ads they display are relevant to the keywords users are searching on. Google's system involves some trust on the part of the advertiser, since it's impossible to tell what you're competitors are bidding. If your competitor has done a good job optimizing their ad copy to achieve a high click through rate, their ad could appear above yours, even if you're paying a higher cost per click.

Other Pay Per Click Search Engines like FindWhat.Com offer an optional 'AutoBid" feature. This feature allows you to specify the maximum you would be willing to pay per click for each keyword, and the system will automatically adjust your bid to $.01 more than the next highest bidder. If your competitor raises their bid the system will continue adjusting your bid until it reaches you maximum bid.

Example:

Current bid for the #1 position: $.50
Maximum bid that you specify using "AutoBid" $1.00
The amount the system will set your bid: $.51

It's important to note that the cost per click may never reach your maximum bid. We highly recommend using automated bidding features whenever possible. These tools allow you to maintain premium positioning for your ads at the lowest possible costs while saving you time from having to check where your ad is ranked every day, and manually adjusting your bids.

In addition to the tools offered by the PPC Search Engines to eliminate "Bid Gaps", there are several third party Bid Management applications that will do the trick. Atlas OnePoint offers a sophisticated Bid Management tool to effectively manage your bidding strategy across 40 different Pay Per Click Search Engines and shopping comparison sites. BidRank is another tool we recommend for optimizing keyword bids, and avoiding "Bid Gaps".

How You Can Profit From "Bid Gaps":

While creating "Bid Gaps" for your own keywords can be a costly mistake, you can often improve the metrics of your Pay Per Click Advertising program by taking advantage of gaps that appear in the bidding strategy of your competition.

Example:

Position # 1 $1.00
Position # 2 $ .79
Position # 3 $. 78

A "Bid Gap" has appeared between the #1 and the # 2 positions. You can either pay $1.01 to lock in the #1 position, or bid $.80 for the # 2 slot. Given these alternatives it may make more sense to opt for the # 2 position. The slight decline in traffic from slipping to the #2 spot may be more than compensated by the improved ROI due to the lower cost per click.

If you want to play hardball with your competitors by driving their cost per clicks higher, while locking in good positioning for your ads at a lower cost, you can manipulate the 'Auto Bidding" tools to your advantage.

Example:

Position # 1 $1.00
Position # 2 $. 79
Position # 3 $. 78

In this example, if you used any of the "AutoBid" features offered by many of the Search Engines and set your maximum bid to $.99 ($.01 less than your competitor in the #1 position), the system would put you in the # 2 position at $.80 ($.01 more than the next highest bid), while your competitor would still have to pay $1.00 for the # 1 slot (since the system would consider your $.99 maximum bid to be the next highest bid, and adjust your competitor's bid to be $.01 more). Software company Pay Per Click Management offers a "CompetitionBuster" feature specifically designed to take advantage of your competition's "Bid Gaps".

We don't necessarily endorse this approach, but the Pay Per Click Advertising game isn't for the faint of heart. You need to have a well thought out bidding strategy so you don't overpay for your clicks, while still getting the traffic volume you need to reach your goals.

The Pros And Cons Of "Bid Gaps" February 16, 2005

Stan Hauser is a leading expert on effective Pay Per Click Advertising strategies, and creator of http://www.pay-per-click-advertising-guide.com

---

How to Increase Your Adsense Revenue

If you're a webmaster, you've probably heard about Google's Adsense.... Read More

Stop Whining About Google!

Blame GameNearly anyone and everyone involved with search engine optimization... Read More

The Truth About Google Adsense

Make $$$$ with Google Adsense! Top Paying Keywords! $100 per... Read More

Increase SEO Sales by Teaching Clients about SEO Truths

In private consultations with some Search Engine Optimizers I am... Read More

How to Beat Your Rivals on Google AdWords

Google AdWords is a great tool for driving traffic to... Read More

How To Use Pay Per Click Ads Without Ruining Yourself

It may seem to be a very expensive way of... Read More

Seven Tips To Getting The Nost From Your Google Ad Word Investment

With Google Ad Words . . .When a person searches... Read More

Adsense, Boost Your Payout 400%, No Really

How?Dead easy.I implemented this tactic myself yesterday on one of... Read More

A Smart Trick for Attracting Higher Paying AdSense Ads

There are no guarantees in life, so I don't guarantee... Read More

Targeting Usage Demographics to Increase Paid Search Conversions

During conversations with web business professionals about pay-per-click search engines,... Read More

Secret Reasons Why Some Businesses Can Afford to Bid Ridiculous, Amounts On Pay-Per-Click Keywords

The other day I was talking to one of my... Read More

Tips for Maximizing Your Google AdSense Revenues

Despite what you may hear, the Google AdSense program is... Read More

Pay-Per-Click Search Engines ? The Basics

Search engine optimization can take a long time to show... Read More

Two Imperative Keys For Profitable Pay Per Click Marketing

Pay per click marketing is one of the simplest and... Read More

Sell Multiple Products Through a Single ClickBank Account

A ClickBank merchant account allows you to define and sell... Read More

3 Adsense Tips To Dramatically Increase CTR

Here are three Adsense Tips, together with the required HTML... Read More

Per Click - Do They Know Something We Dont?

I have utilized pay-per-click (PPC) advertising since its inception about... Read More

Posturing Yourself As The Expert By Utilizing Google Search

First, go to google and type "dan kennedy" into the... Read More

Choosing the Right Strategy for Your Online Business: Pay for Inclusion vs Pay per Click

Back in the old days of the Internet - in... Read More

Five Steps to Profit from Google Adwords

Although I was marketing online since 1997 and was making... Read More

Pay Per Click Web Advertising Power Word Secrets Revealed

First impressions affect your relationship with someone for life. In... Read More

The Perils and Pitfalls of Pay-per-click Advertising

In this age of speed dialing, T1 lines and other... Read More

Adsense Secrets

Pst! Wanna know some Adsense secrets? The only secret is... Read More

How to Master Google AdWords - Part 2

4. Write an attractive ad - you have a very... Read More

Free Pay Per Click-PPC Search Engine Advertising

Did you know that there are actually pay per click... Read More

How to Help Google Make Up Its Mind

As an AdSense sponsoring web site, your goal is to... Read More

Creating Revenue Without Much Effort, Set It And Forget It Online

Earning more revenue from your website is the goal of... Read More

Dynamic Resource for Adsense: 3 Practical Models Quickly Earn & Maximize Google Adsense Revenue

Looking back in time, I could still remember standing in... Read More

AdSense Secrets - Joel Comms Google AdSense Guide Reviewed

Joel Comm is the best-selling author of a book called... Read More

Contextual Ads

These are simply advertisements related, in theory and often practice,... Read More

How To Increase The ROI On Your PPC Campaigns

Pay-Per-Click (PPC) advertising is one of the most cost effective... Read More

Keywords, How to Find Them, and Use Them Effectively

To be a successful affiliate marketer takes a ton of... Read More

Advertising And Generate New WebSite Traffic

Here's a simple way to use "No Results, No Pay"... Read More