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Google AdWords New Preferred Cost Bidding
limoshawn




msg:3313836
 7:44 pm on Apr 17, 2007 (gmt 0)

from [adwords.blogspot.com ]

Today, we are introducing a new bidding option called preferred cost bidding -- a feature designed to help you save time while achieving your advertising cost goals more consistently. Instead of setting a maximum cost-per-click (CPC) or cost-per-impression (CPM) bid, you can set a preferred CPC or CPM bid that represents the average price you want to pay.

And the water gets a little more muddy.

 

arieng




msg:3313857
 8:04 pm on Apr 17, 2007 (gmt 0)

Sounds like a great way to overspend. I wouldn't touch this one with a 10-foot pole.

Clark




msg:3314000
 10:04 pm on Apr 17, 2007 (gmt 0)

I'm glad they keep adding features because it's so easy to master the simple set of tools they had so far ;)

sailorjwd




msg:3314048
 10:35 pm on Apr 17, 2007 (gmt 0)

I just saw that a couple of online universities are now offering PhD's in 'Adwords Campaign Management'. It is a four-year program with thesis being a successful ad campaign with all 'great' keywords and a profit at the end of a semester.

Tropical Island




msg:3314052
 10:42 pm on Apr 17, 2007 (gmt 0)

I must say I have been in AdWords since the beginning and now I feel lost when I go in there with all the new choices, most of which don't seem pertinent to my business.

It basically becomes a time problem trying to manage everything.

travelin cat




msg:3314054
 10:46 pm on Apr 17, 2007 (gmt 0)

sailorjwd, ya think that's great? We just developed a suppository that does the same thing with just one dose.

Yep, one insertion and you are an AdWords wiz.... or something like that.

netmeg




msg:3314057
 10:48 pm on Apr 17, 2007 (gmt 0)

I for one would prefer they worked on fixing some of the existing issues.

Clark




msg:3314082
 11:26 pm on Apr 17, 2007 (gmt 0)

TC, I just spilled my Iced Tea over the screen that was so funny :)

skibum




msg:3314088
 11:39 pm on Apr 17, 2007 (gmt 0)

So how does that affect the landscape of what other people pay?

outland88




msg:3314118
 12:38 am on Apr 18, 2007 (gmt 0)

Quoted from Google:

Who should use preferred cost bidding?

I want my AdWords advertising costs to be more consistent, rather than changing from day to day.

I don't want to constantly monitor and adjust my bid settings. Within the budget that I set, I want Google to take care of my individual keyword or site bids.

Seems like here Google is basically admitting they are churning the accounts on a regular basis thereby increasing your workload. In other words do you want to go back to the way things were by letting us take over your account.

smallcompany




msg:3314300
 6:08 am on Apr 18, 2007 (gmt 0)

I want my AdWords advertising costs to be more consistent, rather than changing from day to day.

Who changes it every day? I guess folks that run small campaigns around one site only. No offence, just a comment from an affiliate who works with tons of partners.

I don't want to constantly monitor and adjust my bid settings. Within the budget that I set, I want Google to take care of my individual keyword or site bids.

Yeah, what about position? I set my preferred cost, I lose my position. I increase my preferred cost, and yeah, here I am where I was with maximum bid.

Wait a minute… what is actually the difference between the two: preferred and maximum?

I can bid max of $1.2 while still paying around $0.65 which may be my preferred CPC. If I set my preferred CPC to be $0.65, is that the same … or not.

What’s the difference? I say, max is this, and I get charged up to that. I say, preferred is this, and I get charged the preferred.

Unless preferred does not give us higher position than max, how to explain this?

To late for me I guess, I may be having better brain tomorrow.

sem4u




msg:3314384
 8:41 am on Apr 18, 2007 (gmt 0)

So now we can automatically bid by position or set an average CPC. I think I will continue working in my usual old school AdWords way, focusing on costs and conversions.

running scared




msg:3314428
 9:23 am on Apr 18, 2007 (gmt 0)

So how does that affect the landscape of what other people pay?

Very interesting question. Some speculation:

Someone on normal bidding, may switch to a lower preferred CPC equivalent to what they were paying on average anyway. Therefore you might expect the advertiser above to pay less as they would just need to pay one penny above the new lower preferred CPC bidder.

The bidder below the preferred CPC bidder should theoretically be unaffected.

However on that basis the only loser should be the preferred CPC bidder (who theoretically would end up paying more for the same thing).

Google though will likely counter that by trying to balance out what the preferred CPC bidder gets for their money, so from time to time the preferred CPC bidder will move above the advertiser who is normally above. In this instance the advertiser normally above should end up paying less per click (but getting fewer clicks as well).

So does this all mean that typically the normally above bidder will have to bid more to to achieve the same average position (but? pay the same or less than they did before)?

Muddy waters indeed

Zealot




msg:3314492
 11:31 am on Apr 18, 2007 (gmt 0)

It looks to me that these are the first signs of integrating DC's bid management tool with adwords and it will surely push up the advertising costs per position. It is probably intended to offset the logical loss adwords have been making ever since they changed the T3 results to load only when you click on the title.

Receptional




msg:3314531
 12:21 pm on Apr 18, 2007 (gmt 0)

I'm glad they keep adding features because it's so easy to master the simple set of tools they had so far ;)

That set the whole tine for the thread Clark - and it's brought a smile to my face. Now we need tools to tell us what strategies we should adopt under what circumstances - I'm going to give a plug for "Brain 2.0" :) All I need is a spare brian for the Adwords stuff and one for real life.

Oops .... typo... no - on seconds thoughts, I do indeed need a spare "Brian"...

running scared




msg:3314614
 1:41 pm on Apr 18, 2007 (gmt 0)

It looks to me that these are the first signs of integrating DC's bid management tool with adwords

I find that difficult to believe, it has only been a few days so that would be some development schedule.

I am sure that Google will have been looking at Bid management independently

RhinoFish




msg:3314705
 3:15 pm on Apr 18, 2007 (gmt 0)

If your max is set and unchanged, what others do around you (both bid and landing page quality and stuff) can make your average CPC move up and down. That's been a big complaint for some folks. So G created this feature so you can set the average CPC cost you want and let G figure out how to move your implied max bid so the average works out. So I bet your intraday positioning will have more fluctuations as they steer things to hit the desired target CPC. What you trade off for lower volatility of average CPC with set Max bids, is higher position volatility.

Setting a max CPC is like setting a stake in the ground that says I'll pay up to this much to get the position I want. Setting an average CPC is saying position is a little less important to me than my average CPC and it's stability.

For most larger campaigns, as people come and go, the averages work themselves out - so I see this mainly as placating those who worry about smallish fluctuations in per click costs (imps and clicks will now be the thing that oscillates via position changes).

But for those who practice bid jamming, gap covering and trumping techniques, your tactics effectiveness just got reduced because some folks bidding amounts are now aimed automatically for an average cost.

[edited by: RhinoFish at 3:16 pm (utc) on April 18, 2007]

beesticles




msg:3314711
 3:19 pm on Apr 18, 2007 (gmt 0)

This must be the feature that unsophisticated advertisers and agencies have been crying out for.

Who should use preferred cost bidding?
I do not want to constantly monitor and adjust my bid settings. Within the budget that I set, I want Google to take care of my individual keyword or site bids.

That is to say, "I'm too lazy or too dumb to manage my spend. Just take the money and tell me when you're done."

AdWordsAdvisor




msg:3314902
 5:45 pm on Apr 18, 2007 (gmt 0)

Hi all,

I'll pass your feedback along to the right folks, by sending a link to this thread to the team.

It may be worth mentioning that this option was added as the result of it having been a frequent request from our advertisers.

Oh, and did I mention that that preferred cost bidding is an option? ;)

AWA

<edit> improved clarity </edit>

[edited by: AdWordsAdvisor at 6:08 pm (utc) on April 18, 2007]

beesticles




msg:3314914
 5:56 pm on Apr 18, 2007 (gmt 0)

AWA, I've no doubt that this feature has been requested many times, and I'm very pleased it's optional!

Paid search is collection of interconnected variables (avg cpc, max cpc, pos, imps, clicks, ROI etc), and when you change one, the others move in reaction. So if you try to pin one of the variables to a spot, you have less control over the others. Sophisticated advertisers, many of whom are on WebmasterWorld, try to spot the trade-offs between those variables to maximise their returns, and that's probably why this feature has so far got a lukewarm response.

inasisi




msg:3315677
 1:14 pm on Apr 19, 2007 (gmt 0)

AWA,

How does this play into the calculation of the actual CPC for the rest of us who bid using Max CPC?

Now we know that we will have to pay one cent more than the Max CPC of the person below us(after normalizing for the quality score). If the person below me is using Avg CPC, how will my click be priced?

limoshawn




msg:3315771
 2:34 pm on Apr 19, 2007 (gmt 0)

If the person below me is using Avg CPC, how will my click be priced?

Therein lies the problem with the option. In theory, the person that chooses the option of an average CPC has no MAX CPC to be used in an auction environment.

AdWordsAdvisor




msg:3315885
 4:11 pm on Apr 19, 2007 (gmt 0)

How does this play into the calculation of the actual CPC for the rest of us who bid using Max CPC?

Therein lies the problem with the option. ...

Good question/observation. I'm reasonably certain that I know the correct answer - but rather than be wrong in front of thousands (?) of people, let me confirm it with a colleague here. I may even get the chance to 'introduce' you to this colleague - he often confirms technical stuff for me, and has a pretty interesting role here at AdWords ;)

I'll post again in a bit.

AWA

AdWordsAdvisor




msg:3316058
 6:26 pm on Apr 19, 2007 (gmt 0)

How does this play into the calculation of the actual CPC for the rest of us who bid using Max CPC?

Therein lies the problem with the option. ...

I'll post again in a bit.

OK, I've heard back from my colleague, Fred Vallaeys, who is a member of the team that created preferred cost bidding - and I've quoted his response below. I hope this will set minds at ease. ;)

Quoting Fred:

When you enable preferred cost bidding, our system automatically updates your maximum bid several times per day to reach your preferred cost setting. This is basically a bid management feature for advertisers who prefer the certainty of knowing their actual CPC or CPM. Since the bid management feature works by changing your maximum bid in the background, all the ads can still be ranked like before, using the max CPC and Quality Score.

I wanted you all to 'meet' Fred, as you'll likely be hearing more from him in the future - both as a resource for my posts in this forum, and at industry events that he'll be attending.

He has recently taken on the role of AdWords Evangelist, which means that in addition to his continued involvement with the product teams, he'll also be spending time with advertisers at industry events. (You may have met him at the last two PubCons, for instance - Vegas and Boston.) If you see him at such an event, be sure to say hello. ;)

AWA

inasisi




msg:3316384
 1:33 am on Apr 20, 2007 (gmt 0)

When you enable preferred cost bidding, our system automatically updates your maximum bid several times per day to reach your preferred cost setting. This is basically a bid management feature for advertisers who prefer the certainty of knowing their actual CPC or CPM. Since the bid management feature works by changing your maximum bid in the background, all the ads can still be ranked like before, using the max CPC and Quality Score.

Let us take an example. Let's suppose that there are only 2 advertisers for a keyword and that both of them have the same quality score with a minimum bid of say $0.01. Let the first one bid $10 and the second one bids a preferred bid of $5.

In this case, would Adwords keep the max bid of the second site above $10 for half the time and below $10 for half the time? If so how low below $10 would it go. Would it be $0.01 or $9.99?

aeiouy




msg:3316390
 1:47 am on Apr 20, 2007 (gmt 0)

Part of me is very tempted to rush in to try this, but I am having a hard time seeing how this is going to benefit what I am trying to do with my business.

I am usually looking for the most clicks, for the highest position for the lowest price.

It is not clear to me that this benefits me in that quest. It very well could, I am just not seeing my way to it yet, and I am hesitant to sacrifice a working campaign to find out.

For all I know it will make things a lot better... but not sure I want to risk it.

So who wants to be a guinea pig. :)

RhinoFish




msg:3316845
 2:32 pm on Apr 20, 2007 (gmt 0)

"So who wants to be a guinea pig."

I think you meant who here is going first, but I did wantr to comment on where some here may use this tool...

If you manage ppc for others, you know who they are... those who are used to paying fixed amounts for clicks do not like the fudginess associated with max bid / actual cpc auction environment. Usually those who have tried CPM contracts for banners - they like fixed costs, but hated the roi. The roi is there in adwords, but fixed costs weren't so fixed. It's nothing huge as far as changing the environment because most ppc managers have developed a feel for (or decent skills at controlling) the gap between max bid and actual cpc - but now you can propose to a client what the average click costs will be.

luckychucky




msg:3316863
 3:01 pm on Apr 20, 2007 (gmt 0)

May I grumble, please?
AdWords was super for me in the beginning. Now, the only thing I've noticed about every new AdWords feature or purported improvement is that inevitably, each serves only to drive my payments to Google higher. It's always touted as a benefit, in that careful boilerplate blather Google loves to carefully construct, but in the end the result seems always the same: a relentless march toward increasing its take.

RhinoFish




msg:3317069
 6:00 pm on Apr 20, 2007 (gmt 0)

i see it as a relentless march toward giving us what we asked for... new ways to control our campaigns.

and, as awa pointed out, this new feature is completely optional.

and i don't see how it will raise prices... other than attracting more players to the game (the more bidders in an auction, generally, the higher the prices) because they're more likely to find palatable ways to spend their money.

scammers in the content network make me complain, but new optional features make us moan? are we bellyachers or what?

James45




msg:3317140
 7:26 pm on Apr 20, 2007 (gmt 0)

It raised my cost...

April 10th cost per click .97 (Average for the entire fall/winter)

April 18th cost per click 1.22
April 19th cost per click 1.23
Today... 1.29 per click

At this rate I'll dump them shortly.

This 35 message thread spans 2 pages: 35 ( [1] 2 > >
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