Bidding and Position Strategies

Your bidding can be set as high as the campaign level, all the way down to a specific keyword phrase.  If you find that “mac icon converter” is converting at a much higher rate than “free icon converter” then it may be in your best interest to bid yourself into a higher position for the “mac icon converter” phrase.  If, on the other hand, you have a keyword that is losing money, it may be time to lower that bid and pick up less traffic.

Contrary to popular belief, it is not always more profitable to be in a higher ad position.  Depending on your chosen niche, being in the top two (or even three) positions (usually above the organic search results, but not always) may convert worse and cost more per click.  For instance, here we have an example of the search results for mortgage loan. 

For the mortgage loan industry, it may be more profitable to be listed first, but my instinct says that what we’re seeing here is more of an ego display than anything else.  When a consumer is shopping for a mortgage you would hardly call them a “casual” shopper.  As a result, the person is probably shopping around quite a bit, clicking on multiple advertising listings before finally setting down and filling out a lead generation form.  These shoppers are doing research before they make a decision and conversion rates in that situation are usually to be found in the 3-4 or 6-7 positions.

Take a different industry, where you do truly have a casual shopper – ringtones.  Ringtones can be purchased with a few clicks, they’re very cheap, so there’s very little research to be done by the consumer.  As a result, conversion rates may be very high in the positions above the organic results.

Remember, just because you’re in the top position doesn’t mean you’re maximizing your profits.

Now when you work on bidding, make sure you set your campaign option to have you manually do the bidding instead of having Google do it for you.  This will allow you to tweak, fine-tune, and really get to know your market in that area.  Your bid is the highest you will pay and may not represent what you are actually paying.  The true metric you care about is the cost per click (CPC).  If you always stay cognizant of your CPC in relation to your revenue per click, you’ll be just fine.  We’ll talk more about these metrics when we get to testing.

The key with bidding however, is finding that sweet spot where the bid is just right and you’re maximizing whatever metric you care most about.  Drilldown your bidding as necessary to that keyword phrase level.  If that’s not needed, then the next logical level will be at the ad group.  It is highly unlikely that you’ll find it sufficient to manage your bidding with one single bid across all of your ad groups.  Ad groups can have very different markets to them, even if you’re advertising the same product.

Quality and Bidding

Google protects the quality of their system with a vengeance.  If you’re out to hurt the consumer in any way, you shouldn’t be reading this guide and you won’t last very long on Google.  They introduced a quality score a while back, which helped cut down on various abuses substantially.  Don’t be worried about Google if you’re always doing things that put your customer first.

Your minimum required bid is based on the quality of your ad and the quality of the landing page you send visitors to.  If quality is low, the minimum bid will be higher.  However, if quality is high, the minimum bid will be much lower.  It’s quite possible for you to bid lower than your competition and be in a higher position because your ad is relevant (which results in higher clickthrough) and your landing page is relevant (which results in a higher quality score and more conversions).  Always bear in mind that Google is after quality.  If you give them quality, they will help you out quite a bit–and you’ll be more profitable.

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