Maximizing Pay Per Click Search Engine Bidding

by Ken Liebeskind, Sep 28, 2001, 12:00 AM

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Pay per click search engine advertising is growing in popularity, but advertisers aren't doing it right. They can't manage their bids, so they end up paying too much for them.

360i.com, an interactive agency with many pay per click advertisers, is trying to solve that problem with a software program it developed called Bid Optimizer. The software interfaces with the top five pay per click search engines and continuously updates a client's bids so they are never more than one cent above the next lowest bid. For instance, if the top bid for a key word is $2.00 and the third bid is $1.50, an advertiser could buy the second position for $1.51 by using Bid Optimizer.

"It creates efficiency and saves money," says David Williams, president of 360i.com in Atlanta.

Williams says the company has been using Bid Optimizer for the past few months, but is just starting to sell it to advertisers and is offering it as a free test to some. They'll pay for it on a per click basis, at three cents per click, he says. One of the first advertisers to use it is Proflowers.com, the second biggest online florist after 1800flowers.com, Williams says.

Bid Optimizer interfaces with Goto.com, Sprinks.com (About.com's pay per click search engine), Findwhat.com, Canoodle.com and Ah-ha.com.

Goto.com is the leading pay per click search engine, with the other four ranking behind it but above other pay per click search engines.

Listings on Goto.com and other top pay per click search engines are placed on partnering portals such as AOL, Excite, Lycos and MSN. Thus, the listings get 75% coverage across the Web, Williams says.

A recent study by CyberAtlas notes that 80% of American companies optimize their search engine buying in house. This creates problems because they are unable to manage the more than 1,000 key words they often buy. They may update their bids once a week, which creates inefficiencies, because by the time they do update, the amount they bid may be far higher than the next lowest bid. Bid Optimizer solves that problem by placing new bids once an hour that are never more than 1 cent higher than the next lowest bid. This eliminates bid gaps, large price gaps in successive pay per click search engine bids.

The savings can be huge for advertisers who buy lots of key words. "If they do it across the board for many terms, it starts to add up," Williams says.

Advertisers will have to work with 360i.com to use Bid Optimizer. It will be offered as a value added service.

The introduction of Bid Optimizer comes at a time of increased use of pay per click advertising. Unlike many other forms of online advertising, pay per click is growing this year, with Goto.com reporting increased revenue of more than 200% during Q2, compared with Q2 2000.

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