Keyword bid optimization

By James Lee

Keyword bid management is one of most important activities of paid search advertising. It is probably the most time consuming and difficult task if you do not rely on the tool. That is why most advertisers with a large monthly budget rely on one tool or another. To understand the challenge of the task, let’s list out the issue at hand.

1. Google does not offer guideline on max keyword bid prices on search ranking like Yahoo does.

The result is customers end up bidding higher than necessary and it results in keyword price escalation on low search volume keywords. We did study on average Google keyword price on 3 keywords combination and 4 keywords combination. The result is 4 words phrase was not any cheaper than 3 words phrase. It caught us by surprise, since the common fact is low search volume keyword is cheaper than high search volume keyword and 4 word phrases are lower in search volume. However, in Google’s case, since advertisers bid keyword without a price guideline, they tend to overbid for low search volume keywords.

2. Finding optimum keyword price and updating them daily is impossible to do manually.

When you have hundreds of keyword and try keep up with keyword bidding strategy daily, it is beyond your capacity. That is why most advertisers who do not use the tool sets the maximum keyword CPC uniform within the same ad group, believing that search vendors do not overcharge them. However, with this strategy, customers end up bidding more than necessary for some keywords or unconsciously promoting bidding war.

3. There is not enough budgets to place all campaign keywords in a desirable ranking.

Average keyword price has been going up every year and many of keywords are out of reach for many advertisers. It means even if you have a tool that guides you optimal bid price for your target ranking, you have to give up on some keywords if you want to generate any significant visitor count. Unfortunately, most keyword bid management tools are based on search ranking and that means you have to bid for low ranking to generate more clicks. However, this is not a good strategy, since you don’t have to sacrifice ranking for low price keyword.

4. Keyword bid optimization is more than searching for keyword bid price to maximize click count. It involves improving conversion count.

Eventually, optimization effort is to generate most conversion actions on a given budget. Thus, once keyword bid price is optimized for the most economical clicks, the next step is to adjust keyword spending to promote more conversion. It is achieved by awarding high performance keywords and penalizing low performance keywords with keyword bid price. It also includes not spending more than ROI break point.