I just got bid out of a listing. It had 6 bidders in it and i jumped in at number 2 for (.45cents). This really must have upset people. I tried to hold it at #2 but the others bid it up to $2. So i got out. Real cut throat. I do understand why though...my CTR was 12%. Now im back in the #6 position and CTR is down to 2%. Im not sure that they will go broke though...the thing was..everyone wanted to be #2. If any of them got to #1,they would back their bid down to #2. Then #2,3,4 would back there bids way down and leave the #1 out there paying the sky high price. So it was a fight to be #2 really. I just couldnt keep up.
Yes. A lot bidding resolves around being #2 now. Blame that on Overture's Autobid system. Before the Autobid system a lot more companies would seek the top spot. But Overture's Autobid system has changed some people's strategies. OV's Autobid makes for strategies that allow advertisers to bid up the competition and leave 'em paying an huge rate..
#1 bidder "Ted" has max bid of $2 using OV autobid
#2 bidder "Jay" is at $1..
So the "Ted" is paying $1.01 for his clicks..
I come along and set my autobid max bid @ $1.99. Now:
#1 "Ted" is paying his max bid of $2
#2 "Myself" is paying $1.01
#3 "Jay" paying $1.00
So "Ted" notices this and sets his max bid @ $1.98. Now:
#1 "Myself" is paying my max bid of $1.99
#2 "Ted" is paying $1.01
#3 "Jay" paying $1.00
on and on it goes up and down... Throw in a few more bidders using autobid coupled with a 3rd party tool and the logistics change. But being #1 is very rarely the spot to be in :)
I'm always on the sidelines kinda like a referee. I've talked with people who try to outlast the competition through low bidding and others who try to outlast the competition by by cornering the market with high bids.
To me, neither makes that much sense. I say bid what you can afford to bid to make a certain return and so be it...
PPC advertising is very simple. Therefore there will always be competition. Companies will constantly be coming and going. If you're the guy trying to stamp out the competition, rather than worrying about your bottomline, you're more apt to be one of the companies going. My $.02 :)
Some companies have deep pockets, and it may
take six months to a year before they clue in.
Thats why its very important to have a large
assortment of minor keywords, that provide a
steady and mostly unchalenged source of leads.
If the bidding gets crazy, just opt out of the
given keyword for a while. Economics will eventually
rule the day.
Every company in every industry that uses PPC should know where break even is for them.
Where it gets murky is the ongoing value of a clicker.
If you take an industry like printers. There are companies bidding $3 on keywords for phrases relating to inkjet cartridges that probably cost around $1 and they sell for maybe $2.99 so you think well how can they bid $3 for a product that they make $1.99 on ?
The answer lies in the fact that people may buy several items and will almost certainly plop the site in their favourites assuming they buy and the product is OK. The lifetime value of a client therefore can make this apparently suicidal bidding practise logicl after all.
But, there is also a lot of kamikaze bidding going on, poor tracking and deep pocketed advertisers with holes in.
Strategical bidding is very much the order of the day.
What these high bidders don't realize, is that
unlike retail. Customer loyalty is very low.
A lot of buinesses went under, using the premise
of capturing market share and branding, not realizing
that repeat customers are much lower than in a brick and
Another interesting observation.
My first thought was that merchants paying such high prices for clicks would have to increase their prices to cover those click expenses.
However, the opposite seems to be happening. We've had to drop our prices twice in the last month to get the sales conversions necessary to make paying for clicks a worthwhile proposition. The quickest way to go broke is to pay for clicks but get zero sales because your prices are higher than your competitors.
In the end, it seems the winner will be the "lean and mean" merchant with the lowest overheads who buy their goods at the lowest prices. This enables them to bid the highest price for clicks and to charge the lowest prices while still making a profit. They get the majority of sales conversions and their competitors either drop out of the PPC program or go broke.
|In the end, it seems the winner will be the "lean and mean" merchant with the lowest overheads who buy their goods at the lowest prices |
Which is no different than the rest of the retailing world. Sounds like you're defining Wal-Mart. Making money on the web is not any different than making it any place else :)
Not always. Take the e-commerce merchant who carries no inventory but drop-ships, has but one employee and operates from a low-rent trailer park.
Where else but the internet can you offer your products next to a Wal-Mart or a Neiman Marcus? In the retail world you need vast inventories, employees and expensive real estate before you even begin.
>>How long does it take for the competition to go broke or smarten-up? <<
It depends on how long the sales cycle is.
If it's a 10 dollar cart item, you can find out post haste what your ROI is. On the other hand, if the sale requires extensive sales and financing follow up, the ROI may not be determined for months.
I think many categories have a "lemming factor" bid process, i.e. If the other guy is paying 6 bucks a click, it must be worth it, therefore we will bid like lemmings..
You can sometimes get distributers to drop ship,
but never manufactuers.
The most efficient model is using just in time
inventory and ordering from the manufacturers.
Of course this means volume, otherwise the
manufacturer will force you to use a distributer.
Amazon started with no inventory, look at them
now. Its amazing how quickly a coffee table operation
can grow into a business that has a traditional buisness
structure, and cost overhead.
|If you're the guy trying to stamp out the competition, rather than worrying about your bottomline, you're more apt to be one of the companies going. |
|If the bidding gets crazy, just opt out of the |
given keyword for a while. Economics will eventually rule the day.
|If it's a 10 dollar cart item, you can find out post haste what your ROI is. |
I agree with all of the above, but how long does one have to wait? Have you ever seen a bidder drop out? It's interesting to me that we all seem to agree that no one should spend more than a certain amount to get a customer, but no one has said that they have let the bidding go crazy for X months, and have the others drop out.
Maybe Overture's new auto-bid system is what will work for us here. I decide that $.50 is all I want to spend. I set my bid there, and allow everyone else to outbid me. Maybe in a year or two, they will go away...maybe.
|Amazon started with no inventory, look at them now. |
True. But more accurately, they had no inventory, and a few million $ in venture capital money. ;)
With PPC or adwords, you can only bid what YOU can afford - period.
I use ppc for promoting online book marketing, not as cut throat as many but still find myself tradding bids with e-bay, amazon etc.. several times a day!
everyone wants 2nd and 3rd. 4th seems to get you shown very little.
Excessive max bidders often find me a penny under them + me and friends very busy on the keywords! (not very ethical?)But they have such huge budgets they don't get the hint!
I read somewhere that eBay's inventory runs to some 500,000 keywords and I often wonder how they can get the ads past the editorial review, but the ambiguity is enough to make the case.
What I'd like to know is this. In most industries you have serious critical mass/volume and it generates a healthy discount or favourable payment terms. Would eBay or other large advertisers get a significant cost reduction because of this large inventory and even larger monthly bill ?
I am new to this forum and glad to be here. In regards to the last post, Ebay does get special treatment because of their volumes. Commonly Ebay will backfill, or provide default listings to a search engine. This way paid results will for the most part display on a wide variety of keywords. This is great for the search engines because they will almost always be able to provide the user with some form of search listing relevant to their searched word.
They can have lower bid prices and lower rankings because they can generate listings if no other advertisers are in that position.
Last spring I had some of the top Overture folks in front of me. Along with other folks there, we really pushed them about whether they ever do volume discounts.
They all said, in as clear a language as you could ever want to hear, that they don't and have no plans to offer anyone volume discounts. In fact, they said it would undermine their entire business model.
Other PPC services may offer volume discounts, but I've been going on the assumption that these Overture folks were telling us the totally straight truth.
I agree. Someone like Overture who is the whale in this industry can simply not pursue deals like volume discounts. This is a great opportunity for the smaller fish who need to fill up search inventory with default listings from Ebay. There are a lot of other backfillers out there as well.
I also agree that these listings do take away from the results and I think that overture would rather not deal with these small bid prices for higher volumes. I refer to those listings as SPAM listings. Mainly because they are catch all phrases. Most of the time these backfill results are bid into search engines at a penny or less. Its really just a way to generate revenue from keywords that normally do not provide paid listings.
Welcome to the forum Nieder3d!
I understand what you are saying with the backfill thing, but I was more curious on the editorial standards. All of the PPC providers, quite rightly, are trying to adhere to strict editorial standards, but often we hear of advertisers getting their ad canned because of relevancy. I wanted to know if there were double standards or if we all were on the same song sheet.
I notice Google and Espotting are advertisers on their own inventory, and didn't know how that sat with others ? Personally, I'd like to see them use different methods to promote, but I suppose it's a bit like a Audi salesman driving to work in a BMW, wouldn't look good (because they won't be endorsing the product, not because one is better than the other).
Oh yes, they definitely relax the relevancy standards for backfills - no need to ask the company for confirmation, the proof can be obviously, even humorously, seen.
Sometimes those "fill in the blank" listings say very absurd things that no editor would ever let past, and the click-through page can also be "off" from the search term. But they still pay the going rate IF they get a click.