Bid Management- Why It Matters

  |  January 22, 2013   |  Comments

In a forever evolving complex digital landscape, marketers are turning to bid management platforms to streamline workflows and drive effective campaigns.

In its nascency, search marketing was relatively simple, and consisted of very basic tools that were solely aimed at the desktop. However, online marketing has evolved into a much more integrated marketing approach across a range of devices. There are now more ad formats and more targeting options than ever before. These new opportunities are accompanied by a rise in search queries; in fact, it's not uncommon to see the average large-advertiser accounts managing keywords in the millions.

And, amidst the ever-expanding digital landscape, search continues to be at the core for many marketers. Its growing complexity has rendered automation a must, and today, automated search bid optimization has become more important than in years past. In a world where every company seeks to maximize ROI with limited resources, marketers are turning to smart bid optimization platforms in order to improve search campaign performance, while simultaneously streamlining workflows.

The critical role of bid management

Scalability in today's search marketing techniques means that there is a need for an automated bid management tool that is able to analyze data and generate smart bids across millions of keywords at scale. With these tools, search marketers can meet specific business goals, increase return on investment, save time managing their keyword bids, and simplify systems and processes across multiple campaigns.

But these new opportunities in search also translate into more tools to choose from. In today's competitive environment, automated bid optimization can make or break a search campaign performance, and as such, it's imperative to choose a tool that does it best.

So how does it work?

Bid management is a critical part of meeting a search marketer's business goals -- whether that goal is a higher ad position on the search page, maintaining a desired return on ad spend, maximizing clicks, or fulfilling a monthly budget, to name a few.

Scott Silver, DoubleClick Search engineering director, explains: "Bid management is software that lets advertisers specify their marketing goals in business terms and leaves the heavy lifting of bidding on millions of keywords with thousands of competitors to computer science."

"I would describe bid management as a mechanism for buying media. It's one of many ways in which you purchase media properties that make advertising inventory available through an auction," comments Aaron Goldman, chief marketing officer at Kenshoo.

To understand how bid management works, it's first important to understand the search ad auction system that makes bidding so important. As Silver describes the process, "Advertisers use keywords to tell the search engine which searches they want their ads to appear on. They also bid the amount they wish to pay, per click on each ad. Then, the search engine uses a combination of how likely an ad will be clicked, and the bid, to determine which ads win the auction. The winning ad will show in the highest ad position."

Bid optimization is the process of collecting all this information, with the goal of automatically selecting and executing the right bid to meet an advertiser's goals. According to DoubleClick Search's recently published whitepaper, Seven Factors to Consider When Choosing a Bid Optimization Platform, the bid optimization process involves:

1. The marketer's goal. First, a marketer inputs their goals, based on their business objectives that they want the bid optimization tool to achieve.

2. Data analysis by the bid tool. The bid optimization tool then gathers and analyzes data on keywords, including external signals such as historical performance, seasonality and offline events like call tracking or in-store purchases.

3. Bid decision sent to the search engine. The tool decides on the best bid to meet the defined goals for any given keyword.

This happens on many bid management platforms -- and on the best platforms, in near real time. After the bid is sent to the search engine, search marketers can then use the search platform's reporting tools to monitor performance, understand the impact of each bid decision, and tweak inputs as needed.

What to Look For in a Bid Optimization Tool

One of the biggest challenges of bid management from the point of view of a marketer is finding a system reliable and flexible enough to accommodate the expanding number of keywords that a marketer may manage. Even if a marketer chooses to use an automated bidding tool instead of managing manually, high keyword counts can still be daunting. Silver says that the larger the company, the more keywords they will have, which can often be millions. Therefore, marketers should look to adopt a bid optimization platform known for robust data management and scalability to millions of keywords.

In addition, a platform needs to have smart algorithms that understand how to make the best decisions for keywords of all types -- not just the high-volume, high-performing keywords. It is imperative for a good bid optimization tool to continually reinvent its algorithms and experiment in order to improve performance over time, Silver explains.

Good data is key in order to be able to do this, and is paramount to achieving high-impact results. Silver says: "The way to think about this is that you have a bidding algorithm which says ‘I want a certain cost- per-acquisition (CPA) target' but you don't know what the CPA was yesterday. You can't update your bids until you understand what you did yesterday and what its impact was. A good platform that can provide high frequency and low latency, that can also provide information on the costs per conversion that happen every hour for example, will determine the exact bid elements that will work for you today." Therefore, seek out bidding tools that pull in metrics frequently from the search engines to work off the freshest data.

Automated bid management can dramatically impact a company's profitability. Done right, a company can transform their business by earning more and wasting a lot less. It's not always easy to evaluate bid opt platforms, but they are each different, and there are questions you can ask to help you make the right decisions.

To learn more on effective bid management and the seven factors to consider when choosing a bid optimization platform, download DoubleClick's whitepaper ‘Turning Complexity Into Opportunity' here.

*Promoted post in partnership with DoubleClick Search by Google.

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Melanie White

Melanie White is the Editor of ClickZ, where she has worked since July 2012. White has been with Incisive Media (ClickZ's parent company) since 2009 where she was Deputy Editor/ US Editor for one of the financial risk management titles, International Custody and Fund Administration (later Custody Risk).

In addition, White worked on FX Week where she was a Senior Reporter. She has also worked and contributed to a number of other titles, including The Accountant, International Accounting Bulletin, the New York Post, Independent Magazine (UK), as well as the broadcast title Sunday Live with Adam Boulton at Sky News.

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