Whether it’s to drive traffic, increase conversions, or maximise revenue, bid optimisation is the cornerstone of any effective paid search campaign. Across industries, publishers, devices, and geographies, bidding strategies vary tremendously as search marketers use a wide variety of proprietary, publisher, and third-party bidding tools and solutions.
However, the success of these tools and solutions is tied to marketers’ ability to not only address the needs of the advertisers, but also manage their ability to implement optimal bids in highly dynamic and competitive auction environments.
Consequently, industry leading bidding solutions are characterised by six core attributes. I’ll be identifying these requirements and discussing their role in enabling marketers to execute a sound paid search bidding strategy below.
1. Flexible Revenue Capture
To achieve a ROI goal, or maximise revenue across a limited budget, search marketers must accurately stitch together publisher clicks and cost with back-end conversions and revenue. Successfully pairing these datasets requires a solution that makes the most of existing infrastructure and provides a bridge between online marketing channels, as well as online events and offline conversions. For example, online applications for life insurance and mortgages often require offline verification and approval through local branches. Capturing revenue as it moves across channels requires flexible integrations with analytics, ad serving, call tracking, and CRM systems. This flexibility allows advertisers to calculate bids with a complete view of paid search performance.
2. Accurate Attribution
Keyword bids are only as effective as the data used to make the bid calculations. As a result, successfully capturing revenue is only the first step in executing a sound bidding strategy. To calculate optimal bids, search marketers must also be able to attribute conversions and revenue back to the individual keywords that drove those conversions. The accuracy of this keyword-level attribution relies on advertisers’ ability to account for differences in consumer behavior.
Consumers often search using several different queries while interacting with multiple ads prior to converting. The number of queries used during a typical conversion cycle varies across industries and product categories. Therefore, an effective bidding solution must be able to attribute revenue across each of the keywords that resulted in the conversion. This includes the ability to give more weight to certain keywords along the click-path. For example, attributing revenue to only the first and last click, or attributing more revenue towards clicks that occur near the end of the click path.
3. Significant Data
Whether it’s selecting top performing ad creative or calculating optimal keyword bids, making decisions based on a significant level of data is critical to maximising paid search performance. In the case of keywords, the number of clicks required when calculating optimal bids vary depending on the keyword’s conversion rate. Bid calculations where limited data is used can result in inflated or deflated bids; both resulting in suboptimal keyword performance.
4. Defined KPIs
In order to measure the success of any bidding strategy, search marketers must first define the key performance indicator (KPI) that a campaign will be optimised for. Though this may seem like a basic concept, selecting the most appropriate KPI can be very complex and difficult. For example, for online retailers, maximizing revenue while hitting a target ROI is a common bidding goal that involves two KPIs. Lead gen companies that acquire revenue long after the initial paid search click might need to choose between a more reactive CPL (cost-per-lead) goal or less reactive, but more accurate ROAS (return on ad spend) goal. Ultimately, having defined KPI(s) will drive a sound bidding strategy.
5. Seasonal Adjustments
Expected shifts in performance, such as rises in revenue-per-click (RPC) or dips in conversion rate, create a common challenge that all sound bidding strategies must address—seasonality. To account for seasonal changes in performance, such as the retail holiday season, search marketers must continuously analyse year-over-year performance and adjust bids accordingly. By increasing or decreasing keyword bids over specified time periods, search marketers can proactively optimise their campaigns for fluctuations in RPC or conversion rate. For example, bid aggressively or dampen bids for in-season and off-season products, respectively. A bidding strategy that doesn’t adjust for seasonality stands to miss out on critical revenue opportunities throughout the year, allowing competitors to capitalise on these opportunities instead.
6. Cyclical Adjustments
Cyclical, as opposed to seasonal, changes in RPC or conversion rates can last for time periods shorter or longer than a single calendar year. For search marketers, this behavior is typically defined by day-of-week or time-of-day fluctuations in performance. For example, an increase in mobile conversion rate during the afternoon and evening, or a decrease in desktop conversions during the weekend. To account for these cyclical changes, search marketers must analyse campaign performance across multiple weeks, identifying day-to-day shifts in RPC or conversion rate. In some highly sophisticated bidding scenarios, analysis of daily performance should happen hour by hour. Using these trends, search marketers can implement an optimal day-parting strategy unique to each campaign, where keyword bids are boosted or dampened daily or hourly.
Flexibility Is the Key to Success
These six tactics, though critical to a sound paid search bidding strategy, are still far from what sophisticated search marketers need to be successful. Addressing conversion latency or multiple conversion types, or forecasting performance based on “what if” scenarios require additional bidding tools and capabilities. Bid strategies that account for these industry and business-specific requirements provide search marketers with the flexibility they need to maximise revenue and hit aggressive business goals in an increasingly competitive paid search landscape.
Fantastic technologies exist to assist search marketers and advertisers to work in tandem to manage the success of their paid for search ads online and even alter spend accordingly. However, there is still a way to go and successful campaigns still require a level of human interaction to make the most of an advertisers’ ad spend. Follow some simple rules to maximise the capabilities of the technology and you’ll see a significant improvement in ROI.