Keyword Bidding Strategies

Keyword Bidding Strategies

How to determine what you should pay per click in Google and Bing

Google and Bing use an auction system on keywords to determine ad placement

Google and Bing use an auction system on keywords to determine ad placement

Pay per click advertising is great in that you only pay when someone clicks on your ad and comes to your website. But what do you actually end up paying per click? That depends on your keyword bid.

 

Google and Bing essentially put each keyword phrase (Ex: “get bankruptcy help”) up for an auction and say, “What are you willing to pay to have us show your ad for this keyword?” They then take your bid (Ex: $3.50), your competitors’ bids, and then rank the ads, placing them in the top 3 or on the right side in the 4-11 positions.

Google and Bing rank ads from 1-11

Google and Bing rank ads from 1-11

 

Keyword bidding can be tricky. If you bid too high, you will eat through your budget quickly, while if you bid too low your ad may not rank high enough to get attention and get any clicks.

 

So what is the right keyword bid? That depends on several factors:

1. What is the monetary value of your customers?

The value of a customer is your primary factor to consider.  A $6 bid on a keyword would be too high to make sense for an Italian restaurant (with an average customer value of $30), but for a real estate agent (with an average customer value of $3,500), this makes perfect sense. The higher the value of your customer, the higher you can bid on related keywords and remain profitable.

2. What is the conversion rate of your website?

Keyword bids are easy to manage. The difficulty lies in determining the appropriate bidding strategy.

Keyword bids are easy to manage. The difficulty lies in determining the appropriate bidding strategy.

Does your site convert 2% or 15% of visitors into leads or clients? The higher your conversion rate of your site, the more profitable visitors are for you. This means you can be more aggressive in paying to get visitors to your site than if your site had a low conversion rate.

3. How high (or low) is your ad showing?

The higher you bid, the higher you ad will appear (all other factors being equal). Do you want your ad in the top 3 spots or on the side in positions 4-11? The higher your ad is, the more traffic you will get, but you will pay more per click as well. If you want more traffic, raise your bids and ad position. 

4. What is your click through rate?

Click through rate is the percent of people that see your ads and click on them. Do you want a 0.25% click through rate or a 4.7% click through rate? The higher your ad position is, the higher the click through rate will be. So if you want to increase traffic, you should increase the keyword bids.

5. What is the search intent of the targeted keyword?

Is the keyword an action word, an information word, or neutral? For example, “file chapter 7” reflects a person seeking to act and hire, while “chapter 7 questions” is more information based. “Chapter 7” is neutral and doesn’t reveal the full search intent of the person. Generally speaking, the more action-oriented the keyword, the higher you should bid, while the more information-based the keyword is, the less you should bid.

6. How aggressively are your competitors bidding on the keyword?

Are your competitors aggressive or conservative in their bidding? In some areas, competition is mild and it doesn’t take high bids to have a high ad position, while in other areas it may take very high bids just to have an ad show in the top 8 positions. If you want to aggressively compete, bid higher on keywords, while if you want to take a backseat and let your competitors duke it out, bid conservatively.

Keyword bidding is one of the simplest and yet most important activities in PPC optimization. The more effectively you bid on keywords, the more cost-effective traffic and leads you can generate.

 

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