Introduction to Bidding Strategies

All the major search networks we advertise on are based on an auction system, which means you have to bid for keywords in order to determine your ad positions.

There are three main strategies for bidding:

Positioning

Since your positioning is determined by your bid, an important aspect of bidding is targeting certain positions. In Google, positions 1 - 3 are at the top of the page, where positions 4 - 11 are on the side.

The number of available positions varies on the nature of the keyword. Informational search queries like “Information about Cancer” will have 1 or no ads, where as commercial or shopping related queries like “Sony TV” will have 11 per page. On average, there are about 8 ads per search query.

Deciding where you want to appear on this list will determine your bidding strategy. While top positions can get you a lot of clicks, they are often not the best return on investment. On the other hand, anything lower than about 7 will probably make you lose out on a lot of potential customers.

Cost-per-conversion

Another way to adjust bids is to reach a certain cost-per-conversion. A “conversion” is an action performed by a user that makes the advertising successful. For example, a conversion could be a sale of a product or filling out a form to get more information about a service. 

If you can determine what a good cost-per-conversion will be, you can adjust your bids around this number. Any keywords producing at a high cost per conversion will be bid down on, while any keywords below this number could be bid up on to possibly gain some more traffic and sales.

Budget management

You can also manage your bids based on budget management. If your budget is unlimited and your main goal is to drive traffic for your site, you would want to bid for top positions in order to gain the most traffic possible. In the opposite case, you would bid down in order to save money. This is more common for low priority products or services that you just want some advertising visibility on.

Since the market is always changing due to seasonality, introduction or departure of competitors in the market place, or modifications to Google's software, you need to adjust bids regularly.