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Bid High If You’re On A Budget

Posted on July 3, 2008 | Filed Under Online Marketing, PPC Advertising 

Adwords is a great, instanteous way to turn traffic on for your site.
But it can get expensive, fast.

So we’re going to go over one way to quickly lower the costs of your
campaigns.

But first some basics about AdWords.

Adwords uses a formula to determine your ad position - bid amount
times the keyword quality score.

Quality Score?

Quality score is determined by your keyword’s clickthrough rate,
relevance of your ad text, historical keyword performance, and other
relevancy factors.

Got it? So there’s the relevancy, clickthrough rate and some other
hand waving. What we’re going to concentrate on is the clickthrough
rate for this exercise.

The end result is - the higher the clickthrough rate, the less you
have to pay for the positions you want. For example, if you have a
twice the click through rate of your competitors, you only need to
have 1/2 the price to get the same ad position.

Fantastic! But how do I…

Get A Better Clickthrough Rate?

There are 3 major things you can do to increase your clickthrough
rates:

1. Have higher positioned ads - This may be completely obvious, but
the higher positioned ads get better clickthrough rates! (Generally
they have lower conversion rates, so you need to find your business’
’sweet spot’.)

2. Put the keyword in the headline. This may mean you have a lot of
smaller adgroups - but the effort is well worth the money you’ll save.
This also positively affects the relevancy determination used by
google (see quality score above) acting as a one-two punch to help you
getter better position.

3. Split Test. You have to be constantly split testing your ads and
determining new winners. Slowly but surely you’ll increase your
clickthrough rate. This is more of a long term strategy. But you
should be split testing from the beginning, so don’t ignore it.

Early on, before you have any relevancy score, the only way you’re
going to be able to get a higher ad position is by…

Bidding High

Counterintuitive to saving money? Yes.

But after you have 10-100 clickthroughs at ad positions 1-3 with
(hopefully) above 5% clickthrough rates, you’ll notice the minimum bid
for each keyword has been lowered. What was once $0.30 is now $0.08.
Once this happens, you’ll slash your bid prices and you’ll be able to
maintain a good position at a much

lower cost.

You could reach the same place by bidding low and consistently split
testing over the coming months until your clickthrough rates are high
enough to lower your bid prices. But that’s months of testing and
paying the default minimum bid prices if not more…). Spending a
couple of days to a week paying higher prices will save more money and
time in the long run.

“Visit my blog and learn the art & science of putting your internet
business on complete autopilot.” -Steven Lohrenz. Here is the URL: href="http://www.stevenlohrenz.com">Making Money Online

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