Optimal Bids: How Do You Set Them?

Writing by Pay Per Click Journal on Friday, February 8, 2008 Leave a comment

Do you know the optimal bid for your keywords and their associated landing pages? Is there an “optimal bid?”

One way you can determine the best bid for your keywords is to take your monthly budget and divide it by 30 (I always assume a 30-day month since that is the average). So if your monthly budget is $300 then your daily budget is $10. Start off with a 100 click per day assumption. It may be more or it may be less, but if you’ve never advertised by pay per click before then you don’t know. 100 clicks per day is a good benchmark but the number of clicks depends on certain factors beyond your control. Your bid prices will be tweaked any way based on actual performance.

$10.00 divided by 100 clicks would be a .10 bid. That’s fairly low for most keywords at Google, but it may be high for other search engines. Nevertheless, you are starting at this point as an “entry” bid. It will change based on actual performance.

Go ahead and bid .10 on all of your keywords for your new campaign. Let the campaign run for one week unimpeded. The most you will pay on any given day is $10, your maximum budget. That’s if you max your 100 clicks for the day. Once you hit the maximum you’ll be cut off automatically and your ad won’t show any more.

After one week, take a look at your stats. The stats you are most interested in on this day of testing are:

  • CTR (Click Through Rate)
  • CPC (Cost Per Click)
  • Daily Budget
  • Average Position

Your Average Pay Per Click Position
If your ads are showing up in the No.1 position at .10 per bid then you’ll likely have to lower your bid. You will probably get fewer clicks at No. 1 than you will at No. 2 or 3. Lower your bid by a couple of pennies to see where you fall and let your ads run again. Depending on how many keywords you have in your campaign, your ads will be at different levels. You could appear at No. 1 for one keyword and No. 5 for another. If necessary, change your bids for each keyword separately. You are aiming for No. 2 or No. 3 in positioning.

If you notice that certain keywords are not getting any CTR during that first week, look to see how many impressions those keywords are getting. Run the ads again at your new bid (a couple of cents lower than your initial bid). If those keywords still don’t get any clicks on the second week then pause them for week 3.

How close are you to your budget? Are you maxing out your budget every day? If so then you should definitely drop your lowest performing keywords. You don’t want to kill your budget on 25 keywords that are getting one click each. Put your money into your best performing keywords. If you are nowhere near your budget then up your bids significantly on keywords that are getting a lot of click-throughs but are low in position.

Your average position is very important. You may be an average of 4. That means you are appearing at No. 1, 2, or 3 for some queries. But you are also appearing below No. 4 for a significant number of queries. Optimally, you’ll be at No. 2 or No. 3 average. Try to bid for each keyword so that you achieve that average position.

After your first set of tweaks, run your campaign again for another week. After week 3, check your results again and make similar tweaks. Remember, the goal is to shoot for an average position of 2 or 3 for each keyword. Whenever a keyword hits that average position for 2 weeks in a row, stop tweaking its bid. Keep it set. Some weeks it may fall and some weeks it may rise because this position is always relative to what your competition is up to. But you want it to be around 2 or 3 on average.

Leave a comment                      Category: PPC Bidding Strategies                      

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