Drunk With Power: Bidding Agent Technology Now Mission Critical To Search Advertising
By Sage Peterson
April 2005
There was once a time when anyone could pony-up to the search engine advertising bar with a credit card, shout out their order, and the Google AdWords and Overture bartenders would slide their low-priced clicks down the bar toward them. The marketer would slug down the sweet, cheap clicks, and ask for another round.
But in most online vertical markets, those days are all but gone. Today, pay per click advertising click prices are as expensive as ordering Crystal in Monte Carlo.
According to iProspect’s Paid Search Price Index, Google AdWords bid prices are up nearly 50% over 2004 – and likely to go higher. Individual keywords in some verticals have increased in price by as much as 300%.
There are only a few levers which you can pull to increase the performance of your pay per click campaign, and they include:
The creative (the text of the ad)
The number of keywords targeted
The landing page
The conversion potential of your website itself
The bidding strategy
Note that 1-4 can be addressed manually, but number 5 cannot. Most of the marketers who are leaders in their respective online marketplaces are targeting over 1,000 keywords with their pay per click campaigns. As the bid prices of many of the targeted keywords change every hour and often spiral out of control at certain times of the day, days of the week and even in certain months (the weeks preceding Christmas for instance), the challenge of keeping a campaign ROI positive manually becomes more and more difficult as keyword prices rise.
Bidding agents can raise and lower bids on thousands – even tens of thousands of keywords -- simultaneously, based on conversion rates by keyword, by campaign, by hour of the day, even by day of the week. Many advanced bidding agents learn as they go, and begin to withdraw certain keywords at certain times of the day as bidding becomes prohibitively expensive, saving budget for more profitable times of the day, or moving that saved budget to other keywords that are less expensive at that time of the day.
Over time, a bidding agent will observe bidding patterns and adjust a campaign’s bid landscape based on these historical patterns, and based on your campaign’s performance. The longer the bidding agent is engaged in managing your search advertising campaign, the more it learns, and the more the campaign is optimized.
Today, when best practices suggest that most campaigns should be targeting hundreds and perhaps thousands of keyword targets, and when prices continue to escalate, an automated bidding agent is fast becoming a necessity, not a luxury.
Overpaying for clicks from search ads in the wrong positions at the wrong time of day, and not properly adjusting the campaign for your competitor’s bidding activity will quickly deplete the resources of a search advertising campaign, and leave the marketer thirsty for a swig of success. It’s time to switch to a professional, management bidding agent system and impose prohibition on an expensive manual bid management process.
