PPC Bidding

In pay per click advertising, the bid is all important. PPC bidding is not as easy as you might think. You cannot just grab a bid out of thin air and then place your ad with a search engine. PPC bidding requires research, analysis of what you can afford, the establishment of a maximum price, and monitoring.

PPC Bidding and Your Budget

Your PPC bidding strategy should first address the maximum cost per click (CPC) that you are willing to pay. There are a couple of ways to determine this price.

• Use industry averages. Google has a keyword tool that enables you to enter a keyword phrase and the maximum that you think you can afford. It then lists the estimated CPC and ad position for matching keyword phrases.
• Do some basic calculations on your costs and profits. Consider the following example. You sell your widget for $100 and have a profit margin of 20%. Your conversion rate (conversions per 100 visits to your site) is 1%. With $20 of profit to spread over 100 visitors, you can arrive at a maximum CPC of 20 cents.

Keywords and PPC Bidding

A lot of businesses select the most popular keywords, hoping to capture a larger audience. As a PPC bidding strategy, this broad reach does not always work. For one thing, popular keywords cost more. For another, these keywords are usually very general terms, meaning that they will not bring you targeted traffic.

You might be better off choosing keyword phrases with a narrower focus, perhaps even incorporating some geographic references to reach your local audience. This targeted traffic is more valuable because it results in a higher conversion rate.

PPC Bidding and Ad Position

Many businesses believe that the purpose of PPC bidding is to achieve the number one position for their chosen keyword. This is not the case. The number one position might get you more traffic (at a higher price), but may not translate into sales.

Your PPC bidding strategy must factor in your budget. In the number one spot, your costs will increase but your sales might not. Set your sites a little lower. A number 3 position will get you plenty of good exposure with lower costs.

The Role of Keyword Relevance in PPC Bidding

Both of the major search engines – Google and Yahoo – use ad quality to determine the ranking for an ad. In Google, the minimum bid for a keyword is also affected by ad quality. The Google Quality Score consists of a number of factors, including the relevance of ad copy. A high Quality Score can result in a minimum bid and a better return on investment.

When devising your PPC bidding strategy, be sure to consider the keyword relevance of your ad – you could realize significant cost savings and improved ad positioning.

PPC Bidding Requires Vigilance

The last plank in your PPC bidding strategy is monitoring. Different keywords have varying effects on conversion rate and traffic, so analysis is critical in determining which are performing best and at what cost. Some experts recommend weekly monitoring, while others say you should be doing daily or hourly reviews. For help in this analysis, you may want to use PPC bid management software packages or hire a PPC consultant.