Grandfathering

Strategic move or plain dumb?

[webdiversity]

When handling accounts for clients, the important metric for us is ROI.

One of our clients has a lot of keywords grandfathered below 5 cents and at the time the bidding was at that level they were always in the top 2 or 3.

Now though, they have slipped down to 6th to 8th and correspondingly the level of traffic has gone from a steady flow to a trickle.

I know what we are going to do as part of the bid strategy, but I'd be interested to see what others thought vis a vis the grandfathering and positioning. They still make money on the nickel clicks.

Any comments?

[vibgyor79]

The strategy to be adopted here depends on the extent of returns from the granddaddy keyword(s).

Let's take this case study -

Keyword bid price - 5 cents
Number of clicks at 5 cents - 100 per day
Amount spent on keyword/day - $5
Sales made (from the keyword) - $20 (one sale, conversion rate of 1 percent)

Net profits per day - $15

Right...
Now let's say we increase the bid price to 10 cents
Number of clicks at 10 cents - 500 clicks
Amount spent on keyword/day - $50
Sales made (from the keyword) - $100 (5 sales)

Net profits per day - $50

In the above case study, it does make sense to increase the bid price. But that won't be the case for all the keywords - it all depends on ROI you are getting from the keyword.

We just look at the returns we get for the keyword at the end of the day (factoring in all the parameters), and then decide on the bid strategy.

[Cheapskate]

Don't give up your grand-fathered low cost bids. Yes, your clicks are bound to go down and your ROI may even correspondingly suffer a little. Instead, focus on re-designing your website or clients website to perform better in the "organic" search results.

Later, Cheapskate

[fathom]

More on the side of Cheapskate here.

Unless zero return is made allow them to peter out.

It's more marketing effective to look at further diversity at low costs "first" before increasing bids and not necessarily increase conversions.

When not getting any hits at all... that's the time to increase (IMO anyway) > unless the budget is there to do both! :)

[sem4u]

It's worth remembering that if you do increase your bids to $0.10 on above you won't be able to get them into the $0.09 to $0.05 range ever again.

[Tropical Island]

This grandfathering has actually created a problem for us. One of our main search terms used to have 4 or 5 advertisers and we always stayed at posistion 2 or 3 which we find is more profitable. Now there are only 3 of us and we have the high bid at 6¢ with the others at 5¢ and can't get out of 1st place.

This has also caused a problem with the CTR %. As the site we are reffering to is for a very particular service in a specfic area while the term is for the general area. The other two sites are general sites covering the whole area and as a result get a higher % even though they are in pos. 2 & 3. Over has now put this term on the low click list even though we get between 5 - 8% CTR. The others must be gettin much more which makes sense.

Many of our refferals come from this term - does anyone think that they will delete a term like this? We would really be upset as we have had this term since the days of GoTo.