PPC Bidding Strategy
When you start on a new PPC campaign, you have to first determine what your bidding strategy is going to be. Vicious or safe, fast or slow? But prior to developing your keyword bidding strategy, figure out your objectives. Usually it falls under these categories:
- ROI – More often than not you want to achieve ROI before moving any further with your campaign.
- Branding – For high budget campaigns. Requires less brain, more capital.
- Lean Gen. – Lead generation ultimately comes down to ROI goals, but can be run at negative ROI in front end.
When you’ve figured what you’re planning to do with your campaign, generate leads or sales and ROI, it’s time to do a little research. It’s always best to know what your competitors are up to when you start out. Simple go to Google Keyword Tool and search for some of your chosen keywords. Look at average CPC for position 1-3 that Google gives you. This shows estimates of how much your competitors are bidding. A better way is to try PPC competitor research tools like Keyword Competitor. They give better figures and even daily spending of your competitor.
Once you know your primary campaign objectives and you have your competition data in hand, it’s time to move on to your bidding strategy.
Keyword Bidding Strategy
Playing it Safe – This basically means bidding for positions 5-8 initially. It will give you much lower CPC’s and often times better conversion rates. As we know, positions 1-3 attract “clickers” who are just browsing around. The downside to that is you’ll get much less traffic than being in top positions.
Conservative bidding strategy is recommended for newcomers, low-budget startups, small affiliates entering new markets. This is when you need to use your brain prior to this point while researching competition and picking just the right long tail keywords to produce sales and not just clicks. It is the best way to gain ROI without spending too much.
Aggressive Bidding – Is done often times by veteran players. You have to have money to burn through. Bidding high initially to get the traffic going. And then lowering the bids based on position, CTR, conversions.
This strategy is good when you want to get data fast and don’t have time waiting for weeks to accumulate enough clicks. Another benefit is CTR and quality score associated with it. You’ll achieve higher click through rate, so eventually pay less per click.
I’ve seen marketers succeed using both of these bidding strategies. It’s not that one is better than the other. It just really depends on your situation, your funds and your goals.
Bidding Wars – Worth It?
If you enter a competitive market, be ready to face some fierce competitors. If someone is making 80% ROI on 10,000 clicks a day PPC campaign, they will not let you get in easily. Often times they’ll fight for every position, paying top dollar just to knock you out. Some will go as far as making negative ROI for a while just to eliminate you. So be prepared.
Question is, is bidding war worth your time and more importantly your money? Suggestion would be to first find the right keywords and produce sales. Some very competitive keywords will not generate sales for you no matter what, so ignore those. But if you see a keyword making profit, then calculate your breakeven point. How much you can afford to spend to be breaking even? If a keyword brings 20% of your traffic, then it’s worth considering stepping up. Wars usually don’t last long. Sooner or later one of the two parties capitulates. But you don’t know how long it will last. They may have a budget of $100,000 and you only $10,000. So they can last much longer than you.
Sometimes you may bid higher to position 2,3 just to see that traffic volumes available. After running your ads for some period of time, take a step back and calculate whether higher traffic volume makes up for the usually lower conversion rates. If you can generate $5K a day profit at 20% ROI, it is still better than making $1K a day at 80% ROI. I say this because search traffic is usually limited and there’s not much scaling you can do. So when there are no more options, it’s best to sacrifice ROI and focus on profit. In the end of the day, the one with larger pockets drinks Champagne.