Determining the Right Bid Amount for your PPC Ads
One of the most important steps when it comes to fully executing your PPC ads is the bidding process. A PPC ad’s bid is the amount that you are willing to shell out whenever someone clicks on your ad. If you’re just starting your PPC campaign, the process of determining which amount you should bid might be difficult. You usually have two options to go about your bid. One, you can take the conservative approach and bid low, once you have reached your return on investment, that’s when you increase your bid amount. Your second option is you can bid high so that you will be on the top spot. Search engines will prioritize those with higher bids so you will be assured of a top spot, but it will be very expensive for you to maintain that position.
The companies who want to start bidding low are the ones who are trying to test the waters. These companies are those who are producing a lot of PPC ads and bidding low amounts on them because they still have yet to know which ones will work and which won’t work. Another reason why companies choose this conservative bidding strategy is based on the reason that they might have a limited advertising budget.
On the other hand, companies who want to bid higher on their PPC ads are more aggressive. These companies want to see the results fast and they want to gain competitive advantage over the other PPC ads out there in the market. This is often times a good approach if you want to get fast traction and reduce your long term price on good keywords, because Google’s algorithm decreases your cost based on your relevancy (i.e. if you have good click through rates, you pay less. But to get good click through rates, you need to bid to get the top spots first. So bidding more aggressively early on helps you solve the “chicken and egg” problem here, and then you should gradually lower your bid prices and make sure you tune them to maximize your ROI).
Once you have started your PPC campaign, it is important that you keep track of your ads. Your PPC service provider can do this for you but its better that you keep your own monitoring for your own use. It is also a good practice because you, as a PPC practitioner, should be on top of all things concerned about your PPC ads.
If you have a specific demographic that you are targeting, you can specify what bid amount should be applied to this certain demographic. This is called demographic targeting. This is extremely helpful if you want to reach a certain audience with your ad.
Remember that having the top spot in the bidding will definitely give you an advantage over your competitors, but it is not always the case. Yahoo! Search Marketing even tells its customers that they should not aim for the top spot and this means a lot coming from a PPC service provider. Most PPC practitioners have the wrong notion that they should bid high all the time. You should know that you should only bid high if the keywords are giving you high conversion rates. This is how you get the most out of your money when it comes to PPC.
