Step-7:Google Adword Bidding Strategy.
One of the most overlooked areas of AdWords
optimization is bidding. With AdWords, you choose an amount that you want to pay
for each click, for each keyword. This is called your max bid. You will not
always be charged your max bid; it simply sets a limit on how much you are
prepared to pay.
When you launch a fresh campaign with new keywords, Google decides your position largely on the basis of your maximum bid or “cost per click” (CPC).
That said, certain keywords are more expensive than others. For example,
“re-mortgage” might cost an average of $1.00 per click, while “matchbox cars”
might cost only $0.05 for the same position.
The simplest way to determine how much a certain position will cost us is to use
Google’s Traffic Estimator. You can access this by going into an ad group within
a campaign, clicking “edit keywords”, and a box should come up. Enter your
maximum bid.
Play around with your maximum bid, and click “re- estimate
traffic”. This will give you a rough estimate of the kind of position and
traffic you can expect at that maximum bid.
The Traffic Estimator is just that, though, and it will only give you a rough
picture of how much traffic advertisers have averaged in the past at that bid
amount.
What do you set as your maximum bid amount? Well, I normally have a rough idea
in mind that I generate based on several factors.
The first factor that determines my max bid is the amount I expect to make per
visitor.
This can only be a rough estimate, though, so I do not rely on it completely.
Let’s say we are promoting a product as an affiliate, and each sale earns us
$30. We will assume that 1 in 100 visitors converts to a sale, and therefore we
can afford to pay $0.30 per visitor ($30 / 100) to break even (a 1% conversion
rate seems to be a conservative average).
In truth this is only a very vague estimate for several reasons. For a start,
there is a massive gap in conversion rates for different products. Some products
convert at an average of 0.5% and some convert at an average of 5% (quite a gap
isn’t it?).
Secondly, how well the product converts depends upon the nature of the keyword.
People who search for “buy Adsense Guide” are obviously
much more likely to convert for this product than someone simply searching for “Adsense”.
Someone searching for “chocolate cake recipes” would be even less likely to buy
a copy of some other book (I’m being flippant now, but you get the picture).
For these reasons, understand that the above calculation is pretty flawed, but
right now it’s all we have to go on.
The second factor that determines my max bid is what everyone else is paying.
The more other users are paying, the more I am prepared to pay (within reason).
As a very broad generalization, if everyone is paying a lot they are making a
lot. If you find yourself paying a lot but making a loss, check out the
competition’s sites and do whatever they are doing – this is a point I return to
later.
In my experience, if paying $2.00 doesn’t even get you on the first page, then
there are some savvy marketers making a hell of a lot of money from that niche,
and it might be best to stay clear at least until you advance.
When it’s all said and done, I think your starting bid should always be low –
lower than you would like. The truth is that a million factors can make or break
a
campaign, and it is better to start with a very low max bid (and low traffic),
and build up from there.
If your campaign flops, you haven’t lost much. I a always talking to marketers
who tell me “I lost $200 yesterday on my new campaign”, and my question is
always the same: “what made you think you could spend and recoup $200 on your
first day?”
Unless you are almost certain that a certain campaign will be profitable (and
the only way to know is to have run it before), then set your bid lower than you
would like.
Again, this is in marked contrast with what the “gurus” say, but I like to
assume the worst and if I’m wrong, I gradually up my bids and increase my
traffic.
The guys who spend $200 on their first day always crash and
burn. Meanwhile, the ones who start small in multiple niches, with multiple
products are the
same guys who will be making six figures in a year’s time (it has to be one or
the other, your time is finite).
It’s always better to start small and bid low with a new campaign, unless you
have a really good reason not to.