SearchFocus: Pay Per Click

by Mar 31, 2005, 3:20 PM
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By Sage Peterson

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 in tow, and ask for another round. But in most online vertical markets, those days are all but gone. Today, pay-per-click advertising prices are as expensive as ordering Cristal in Monte Carlo.

According to iProspect's Paid Search Price Index, Google AdWords bid prices are up nearly 50 percent over 2004  and likely to go higher. Individual keywords in some verticals have increased in price by as much as 300 percent.

There are only a few levers that 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 the Web site itself
The bidding strategy

Note that the first four can be addressed manually, but the fifth 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 return on investment positive manually, becomes increasingly 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.

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.

When best practices suggest that most campaigns should target hundreds, and perhaps thousands of keyword targets, and when prices continue to escalate, an automated bidding agent becomes a necessity, not a luxury.

Overpaying for clicks from search ads in the wrong positions at the wrong time of day will quickly deplete the resources of any search ad campaign. By not properly adjusting the campaign to accomodate your competitor's bidding activity, a marketer will remain thirsty for a swig of success. A professional bidding agent can take the pain out of the manual bid management process.

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