Pay Per Click Bidding - How Exactly Should You Bid?

Pay per click bidding or PPC bid management is the concept whereby pay per click search engines first allow you to establish an account with an initial deposit, after which you could make pay per click bids for top positions in the site's search results pages for certain targeted key phrases or keywords.

PPC bid management services or the PPC bid management system basically helps manage the endless auction between you and your competitors while you both fight for the top position ( which gets the majority traffic).The more you are prepared to pay for a click through, the higher will be your position in the search engine results.

How Should You Place Bid On PPC Search Engines?

In pay per click bidding, you should first possess an in-depth knowledge on how much you should bid for a top position. To achieve this you must be aware of your expected conversion rate (that is, how many visitors to your site are actually converted to actual sales), as well as the total profit margins of your product.

For instance, let us suppose that the product you are selling are computer books, and the sales are being made with the gross profit margin standing at 4$ per computer book. If 3 out of every 100 people have clicked on your link, then your conversion rate would be about 3%, you would have sold 3 books, and you would have made a gross total profit of 12$. This naturally means to break even with your investment; each click should be worth $ 0.12. In your pay per click bids, anything less than this amount means that you are making money, anything more means you have lost money.

What Should You Consider Before Bidding on PPC?

Engaging PPC bid management services could prove to be either costly or confusing. You could well be asking yourself the following questions:

Is it really worth the money to bid for the top spot?
Contrary to the usual recommendations of search engines and PPC bid management theories, it is actually not smart to make your pay per click bids for the topmost spot - for primarily two reasons.
- It is not cost effective. On the contrary, it could prove to be outrageously expensive.
- Most surfers of websites try out varied search queries before they find the one that fits what they are actually searching for. Therefore a click from a visitor does not necessarily indicate a certain conversion.
How much can you actually afford to spend?
Pay per click bid management or the PPC bid management system starts with you identifying the maximum amount per click - or maximum cost per click(CPC)-that you are prepared to pay for a certain, targeted keyword or key phrase. If you have no clue as to this value, it is better that you leave off engaging in PPC advertising altogether. Or you could take an educated guess, based on internal factors like profit margins.
Learn the limits of your bidding budget
and be sure not to get yourself involved in heated bidding auctions unless you are certain that you can afford them.
You must learn to track and monitor your paid traffic by keyword.
You need to identify which sites get you the major portion of your traffic, and accordingly build your bidding strategy.

The Differences between Go ogle PPC Bidding and Overture PPC Bidding:

In PPC bidding, you must adopt and follow different bidding strategies for both Go ogle and Overture. This is so, as their pay per click systems differ from one another, and it is well worth the time and effort spent identifying different bids - for the same key phrase- across two search engines:

While Overture sponsored results are solely based on PPC bids, Go ogle uses a combined system of both bidding and CTR (Click through Rate).
For the purpose of deciding on the initial bid range, you could start with Overture, as their bidding system is open. It is quite likely that those advertisers who bid for key phrases on Overture are also bidding, in the same range, on Go ogle. For Go ogle, you could use Overture bids as your starting base for the short term, and then for the long term, reduce the bids - provided your CTR is high enough.
Ads from Go ogle will primarily drive traffic to your site from http://www.google.com/ and from aolsearch.aol.com, while ads from Overture will come from search.msn.com and search.yahoo.com.
While ad words in Go ogle are completely automated, in Overture you would need to wait for "approval."
While Overture ad word bids are transparent - that is it allows you to locate bids via sites like http://uv.bidtool.overture.com/d/search/tools/bidtool/c - ad word bids from Go ogle are not so.

What Is PPC Bidding War?

PPC Bidding Wars occur when you and your competitors vie for highly trafficked top positions on the search engine's search result pages, therein setting off in motion an irrational keyword price escalation. The more that you bid per click through, the higher would be your position in the search engine listings. You will get lot of traffic if the position is high. That is the reason for the auction existing in the first place - since you are making your bid for more traffic. You make your PPC bids for the top position since the traffic that that position generates falls quickly as you move down the listings. The only real beneficiary of such wars is the search engine.

Discussing Bidding War Tactics:

There is a wide variety of both offensive and defensive tactics that a bidding "warrior" could make use of, the more prominent among them being:

Bid Jamming
This is a punishing technique of making a bid that is just one cent below another competitor's maximum bid price for the targeted keyword (who, in turn, is making this high bid so as to maintain his top position in the listings), and is often used by advertisers who are irritated at being closed out of top positions on account of this competitor's high bid. Now when a searcher makes a click on the "jammed" ad, the competitor has perforce to pay his maximum bid price. Some more such clicks, and the competitor could find his budget quickly draining away, as he exceeds his daily spend limit, and perhaps, forcing him off the playing field altogether.

However this technique could backfire should the competitor realize in time that he is being subject to bid-jamming. He could then retaliate in kind, by lowering his bid price just a cent below the bid jammer's price. Now it is the bid jammer who would suffer the agony of drained budgets and the prospect of disappearing from the "battlefield." These tit-for-tat tactics could continue indefinitely, in a kind of "saw tooth" wave.
Bid-Shadowing
where you could track and monitor a competitor's bid price so that you could bid just a cent below and maintain your relative position in the listings.
Gap-Surfing
where you could seek, find and exploit crucial keyword price differentials, in order to maintain your top position in the search engine listings, and yet not have to pay a premium.

Continue to: Tips On Ppc Bid Management

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