How Paid Search Bid Data Tells The Story

by Laurie Sullivan, Jul 30, 2010, 2:12 PM

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Paid search bid optimization still confuses some marketers, but there are experts out there from companies like The Search Agency, 360i, and Click Forensics offering a variety SEM bid optimization services that can help.

Optimization methods depend on campaign objectives, budget, data constraints, market competition, and technical knowledge of the marketer. Many rely on Google AdWords to run paid search campaign because they say the search engine walks them through the process with easy-to-use instructions, but not all believe it's that simple.

On average companies expect to spend 37% more on paid search advertising in 2010 compared with 2009, and most marketers' paid search strategies aim to either to sell products or services by driving traffic to their Web site-sometimes both. That's according to Search Engine Marketing Professional Organization's State of Search Engine Marketing Report 2010.

For those who find the keyword bidding process daunting, the Search Agency published a while paper this week that outlines several approaches. These tips on managing bids for auctions could provide insights. After all, even the top PPC experts think this complex process can produce the most impact on an advertising campaign.

One of the biggest challenges marketers face remains what to do with the massive amount of data the paid search process generates. Initially, offline marketing joining the online world have no idea, and the data intensive process and the requirements for implementing each method can create the biggest obstacle. Two primary considerations are the size of the paid search account, as measured in both keywords and annual spend, and the technical sophistication of your Web analytics and backend accounting systems.

The numbers, or data, tell the story, and the ability to identify and track the trends through the data can make or break the campaign. As The Search Agency white paper suggests, without effective data integration, marketers lack the necessary standard to measure and test all future campaign changes. Data analysis becomes central to rules-, portfolio- and probability-based bidding all of which require huge data sets and the ability to interpret the information for the method to work.

The Search Agency calls fixed bidding, for example, a "set it and forget it approach." It's the most basic form of bid management when working with a smaller set of keywords because marketers can set the bids to one, round value-such as $1-and enter a monthly budget limit and then just pay the resulting bill each month.

The white paper also explains position-based bidding to maintain an average for ads associated with each keyword. Marketers can check those numbers on a regular basis (either by hand or by software automation), increase the bids on ads that are below their target position and decrease bids on ads that are above their target position.

The white paper, which details several approaches, explains that selecting the optimal target position can become challenging for words specific to an industry, but in cases where the optimal target position is more obvious, such as getting ads for brand-related terms to rank in top position, this bidding approach can be helpful.

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