The Position² team was very excited when we announced the formal release of our in-house Bid Management platform late last year, and we have been seeing tremendous success in its adoption across companies. We have been developing and using it for the last four years for our existing customer base. And yes, there are still a few skeptics out there who do not realize the importance or need for automated bid management. Would you really want to use a scissor to mow your lawn?
Building A Case For Automated Bid Management
If you manage PPC campaigns with a budget of more than $50,000 per month, you will relate to the facts that we present in this graphic. There is always more competition, so you need to keep looking out for them as they affect the performance of your campaigns.
You have less time to respond: you need to be quick to take advantage of market driven changes and developments, or your competitors will. Newer technologies: search engines are constantly upgrading and modifying their systems, you need to ensure it is leveraged in the best possible way. Then there are scalability challenges associated with higher spends. More keywords, more ads, more landing pages, whew!
To top it all, everyone in your organization, including the CEO in most cases, is involved in how your search marketing is performing.
It is all about coverage and optimization. Coverage is about how you can reach more of your potential audience, and optimization refers to reaching them at the best possible return on investment. Let me share this example of a hypothetical book store that sells one book. The book I use in this example is ‘The Lost Symbol’ by Dan Brown, and your challenge is to reach out to all potential buyers in the most cost effective way. Two dimensions as explained below;
- Increasing CoverageDiscovery of additional keywords, so you start with a core set and keep expanding that set, hypothetically as much as you possibly can efficiently manage.What’s really important is that you need to have a fast and efficient way to discover keywords, we are dealing in the “hundred thousands of keywords” range here and you will agree that automation is the only way out.An automated system could run each keyword through a process of discovery, day in and day out without coffee breaks!
- Increasing ReturnsThis is the other dimension. Among the keywords that you have identified, how do you maximize your returns? As shown below, the only way is to manage each keyword individually, as each one has a unique bid-value point at which it provides the best returns. Imagine doing it manually for thousands of keywords on a daily basis.
Statistical Methods Have Evolved Too!
There were simple rules that were executed using spreadsheet based tools. This was followed by model based systems, and now complex portfolio based systems allow for more accurate bid management. So while skeptics questioned the initial inefficient methods, technology has caught up and Auto Bid Management seems to be a no brainer.
To sum it up, In a situation like this, manual bid management, and rule based systems with long campaign cycles is a sure shot recipe for diminishing returns. You need to embrace automated bid management that can provide improved performance and better returns for investments.
The Position² AutoBid Recommendation Engine
Here is a quick peek into our AutoBid Recommendation Engine. The system takes input via APIs from major search engines (it supports Google, Yahoo, Bing at this point in time). Campaign managers can configure parameters, which are primarily the target values of CPL, CPCs etc. The platform then takes over, and can make bid changes automatically or we also have provision for manual intervention. Since we provide services, we have seen this as a must have feature for nearly all our clients.
Bid Management Methodology
The engine uses complex algorithms and curve fitting programs to model the search engine bid environment and identify optimum bids. To explain it in simple words, take a look at the charts below.
Model Based Bidding:
The engine predicts expected clicks for all possible bid values, using the data collected on a minimum of 2 clicks.
If you were doing it manually, it would mean trying out all possible bid values (which is actually infinite!)
This data is then used to model a conversion rate. The model looks at how similar keywords and keywords in the same cluster have performed.
This data is used to identify the optimum CPA value for each keyword, yes each keyword. And this is done on a regular basis. If you ask why, we are operating in a dynamic environment, to get the best results you need to do it regularly.
Portfolio Based Bidding:
Extending the above, graphs are plotted for each keyword, and the optimum bids across keywords for budgets are plotted.
Does It Really Work?
We would like to share 2 case examples where we were able to improve performance significantly.
Case I – Online Books Retailer:
Like any other online books retailer, we were dealing with over 5 million titles, so it was a very complex account structure. High seasonality and event based activities, needing fast turnarounds. A significant variation in profit per unit, as prices of books had a wide range.
Here is a summary of activities across 3 key parameters: Coverage, optimization and speed.
The results are there to see - 9x increase in sales and CPA reduced by 80%
Case II – Online University:
The challenge was to get 20,000 applications for the courses in a period of 5 weeks. We were dealing with over 30 different courses and local region preferences.
Summary of activities:
As you can see, there’s no magic, it is a simple common sense driven approach aided by some cool technology that can help improve the performance of PPC campaigns. While there are many automated bid management systems out there, what is key is to understand whether they operate on simple rules or portfolio optimization. The performance you need will come from systems that are based on portfolio optimization.
As a simple way to see how or whether the AutoBid engine can really improve performance, you can test it out on a single use basis. We offer an online Search Marketing Efficiency scoring interface, where you can upload your data, and let our engine analyze it to come up with a report on the ideal metrics your campaign should be giving you. A sample report snapshot is below.
In case your score is less than 6, you can get substantial improvement in performance. Go ahead, it’s free and has no strings attached.
Contributed by Vinod Nambiar, Director of Global Delivery, Position²
This article is based on a webinar that was delivered by us as part of the formal launch of the AutoBid Recommendations Engine.