In paid search programs, the levers you can pull to improve results come in many forms: landing page optimization, ad copy testing, program structure efficiency, automated workflow, and reporting functionality. The most powerful tool, though, is unquestionably keyword bids.
SEM bidding optimization is the most significant way to achieve peak performance in paid search. A number of techniques and tools are available to help advertisers take on this challenge, but there are strengths and weaknesses among these. Over time, innovative transformations have sprouted up, but there is an apparent divergence between what benefits smaller versus larger search programs.
In this article (and more thoroughly in our new eBook) we explore some of the transitions, strengths, and weaknesses of different PPC bid optimization techniques – all to help performance marketers like you find success in improving paid search results.
Limitations in Today’s Paid Search Optimization Landscape
Today’s landscape is varied, and many of the tools are provided by our beloved search engines – predominantly Google and Bing.
Manual bidding is a powerful technique that gives the advertiser control, but at the expense of effort. Like some of the other native tools, it can work well for smaller, local programs, yet any sizable program (in terms of budget or keywords) will quickly hit a problem of scale where true optimization, frankly, can no longer happen.
Google’s Smart Bidding options are the clear stand out for cheaply and easily applying real optimization tools to your PPC bids, but even these have limitations. Restrictions arise when it comes to the amount of your business data that can be used for optimization (outside of the Google tracking ecosystem), or when it comes to long-tail keywords without enough traffic or conversions to get any optimization.
Scripts on Google and Bing, or other “out of the box” tools, provide some functionality to optimize, but many of these are made for problems of simple logic, programs without many keywords, local businesses, or businesses that collect meaningful lower funnel data. Third party tools are outperforming native tools in many instances due to differences like these between simple, small programs and large, complex build-outs.
Methodologies have also transitioned over time. The old folder model was a great way to optimize PPC bids in the past, but it has since become outdated. A folder would optimize for a given goal in a simple and direct way: higher-performing keywords would be bid up, and lower-performing keywords in the folder would be bid down. This, unfortunately, resulted in some keywords becoming lost after being bid down so regularly – not the ideal outcome.
Aggregated bidding leads to inefficient bidding as it does not reveal or eliminate hidden waste at more particulate levels. In general, aggregating simplifies the task at hand (which is great in some ways!). However, when we’re talking about SEM programs that are core revenue producers in your business, this mindset promotes just-above-average results.
More Granular, More Data, and Portfolio Methodology
With the current data environment we live in, PPC marketing creates massive troves of click-level data that follows the customer through their journey to multiple purchases, sometimes offline sales. This data is the key and the fuel to unlock and boost SEM.
Granularity is of massive importance in the modern age of bidding optimization. Click-level information leads to click-level correlations, which result in the ability to optimize at very granular and specific levels for different audiences and keyword queries.
The tried-and-true SEM optimization technique known as portfolio bidding is actually still one of the best possible ways to make PPC bid decisions for programs that have revenue or conversion goals, but still need to stay within a cost efficiency limit. Most bid optimization tools utilize this technique, but there are some key differences that will separate the good performers from the greats. The three key aspects are:
- Rigor of machine learning models
- Strong infrastructural capabilities
- Data unification and execution
SEM teams looking to optimize PPC bidding face a number of challenges and blockers. There are some obvious ones, such as insufficient budget or already averaging position one, but we discuss some of the blockers that are hidden at first glance, including:
- Sufficient Keyword-level Data
- Automatic Bid Adjustments
- Anomaly Detection and Monitoring
- High Fidelity Modeling
- Lower Priority for Performance
Learn More About SEM Optimization Techniques and PPC Bidding
Our new eBook, SEM Optimization Techniques: Are You Overpaying Google? looks at the landscape of bidding optimization techniques (from tools to methodologies), some blockers teams may face, and the variability between average versus great third party PPC optimization tools.
Why is portfolio bidding for PPC the best methodology for many large advertisers? Why – for others – is there an even better way than portfolio bidding? Is infrastructure that important for fully optimized PPC bidding? How does more granularity and more data create better results? Read the eBook to learn these answers and much more.