Keyword bidding is one of the most important aspects of pay per click advertising. Bid too low and your ad will appear so far down in the SERPs that your CTR will be too low to judge your ad’s effectiveness. Bid too high and you won’t sell enough product units to make your advertising profitable. Therefore, you must learn to optimize your bidding practices. That requires some level of skill and new advertisers should just plan to take a loss until they figure it out. How much of a loss depends on your own learning curve, but here are some suggestions to help you on your way:
- Set a daily and monthly budget – Since you are planning to take a loss early on, minimize your risk by establishing a budget as you learn.
- Be sure to bid on the right keywords – Bidding correctly is as much about targeting the right keywords as it is bidding the right amount. You can’t bid optimally on the wrong keyword so make sure you do the proper keyword research to find the keywords that most appeal to your audience.
- Find out what the top bidder for your keyword is paying – This is a simple one day test. Bid $10 and after your first click through put your campaign on pause. You won’t pay the full $10 unless the highest bidder for a keyword has overbid that amount. You will only pay 1 cent more than the highest bidder. But performing this test will allow you to see what your upper limit is. After you know that you can adjust your keyword bids to target where you want your ad to place.
- Ensure that you have tight ad groups – Putting a keyword into the wrong ad group can cost you in more ways than one. Do some experimenting and find out which keywords operate best together.
- Determine your break even point - How many units must you sell to break even on your keyword bids? If your unit price is $1 and you bid 5 cents per keyword, how many units do you need to sell to break even? How high should your CTR be to sell that many units? This is done through testing and experimenting. It might take some time to arrive at your answers but play with your keyword bids until you figure it out. Use it as a measure for all future advertising.
The most important thing for all pay per click advertisers is to set a budget. You don’t want to lose your shirt before you realize the effectiveness of your pay per click advertising. Take it slow and do a lot of testing. Measure everything.
