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Essentials for a robust paid search bidding strategy


Essentials for a robust paid search bidding strategy


Whether it’s to drive traffic, secure more conversions, or maximise revenue, bid optimisation is the linchpin of any effective paid search program.

Bidding strategies vary tremendously across industries, publishers, devices, and geographies, with search marketers utilising a wide variety of proprietary, publisher, and third-party bidding tools and solutions. The success of these tools and solutions is dependent upon their ability to not only address the needs of advertisers, but also their ability to calculate optimal bids in highly dynamic and competitive auction environments.

Industry leading bidding solutions are characterised by the following six attributes and each of them is critical to a robust paid search bidding strategy:

1. Comprehensive revenue capture

To optimise to a ROI goal, or maximise revenue across a limited budget, search marketers must accurately piece together publisher clicks and cost with backend conversions and revenue. Successfully combining these datasets requires a solution that leverages existing infrastructure and provides a bridge between online marketing channels, as well as online events and offline conversions. Capturing revenue as it moves across channels requires flexible integrations with analytics, ad serving, call tracking, and CRM systems. This allows advertisers to not only maintain a single point of truth, but also enables them to calculate bids with a complete view of paid search performance.

2. Attribution precision

Keyword bids are only as effective as the data used to make the bid calculations. Consequently, 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 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 behaviour.

Consumers will often search using several different queries and interact 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. Meaningful 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 sub-optimal keyword performance.

4. Clear KPIs

In order to measure the success of any bidding strategy, search marketers must first define the key performance indicator (KPI) that their program will be optimised for. Selecting the most appropriate KPI can be very complex and difficult.

For example, for online retailers, maximising 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 goal or a less reactive, but more accurate, ROAS goal. Ultimately, having defined KPIs will drive a sound bidding strategy.

5. Seasonality measures

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 deploying boost schedules, where keyword bids are increased or decreased over specified time periods, search marketers can proactively optimise their campaigns for fluctuations in RPC or conversion rate. A bidding strategy that doesn’t adjust for seasonality risks missing out on critical revenue opportunities throughout the year, allowing competitors to take advantage of these opportunities instead.

Cyclical adjustments

Cyclical changes in RPC or conversion rate can last for time periods shorter or longer than a single calendar year. For search marketers, this behaviour 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. 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, and in some highly sophisticated bidding scenarios, analyse daily performance 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.

Although these requirements are essential to a robust bidding strategy, it’s important to note that sophisticated search marketers will need more than them 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 six requirements, however, will provide search marketers with the flexibility they need to maximise revenue and hit aggressive business goals in an increasingly competitive paid search landscape.


Roland Irwin

Roland is the general manager of Marin Software Australia. Roland co-founded the Sydney office in 2011 and has helped grow the business since its inception. Roland’s hands-on experience has given him extensive local search industry knowledge and a high-level understanding of global trends. He is passionate about how Marin Software can acquires revenue for advertisers and agencies and loves a yarn about emerging digital trends and Marin’s predictions for the future.

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