I have bidded on [keyword] at 6p per click for about a year, which generates revenue at a phenomenal rate and ROI.
Today, a competitor has jumped in, bidding at 75p CPC, knocking me to 2nd place (out of 4), and eroding much of my previous traffic.
So how do I get back to number 1? Do I bid just under him at 74p, forcing him to pay 75p per click, until he realises he's getting a negative ROI (but losing most of my revenue during that time), or do I just go for 76p and hope that Adwords discounts my bid somewhat (but he'll then be getting 6p CPC in 2nd place)?
I'd rather like to get back to 6p per click somehow, but am having difficulty in seeing the best strategy to use this time.
Bump yours up and wait for him to blow his budget.
Just make sure the entire formula doesn't bump you into first place making you pay most of that 0.74, as with changing CTRs, its easy to switch 1st and 2nd place which can make a huge change in your CPC since theres a 0.68 between your current bid and what you'd move it to.
You might be better off bidding around 0.60 to make sure you don't end up in 1st place suddenly.
How much less traffic are you getting? What happened to conversion ratio and ROI?
If anything, I would try to determine a higher bid level that you would be willing to pay long-term: something that still gave you a decent ROI.
Then spend some time trying to increase your CTR- ad more creatives, variations on the best, spend time tweaking.
I would also scour the competitor's website to see if there are any doing some things better for usability, and adapt their work if you find gems.
Now we also found that if we stayed in 3rd place, we did lose much more traffic then we did in 2nd place. I looked for our stats, but couldn't find them.
I'm sure it is different from business to business, but for us, 2nd place worked out fine.
Another factor is whether your product is a considered decision or an impulse item. The more considered the purchase, the deeper the users will search.
I went for top spot in the end, and bidded at 75p (but only actually paid 30p), but ROI wasn't good enough, so just put myself back to 6p in position 2 this afternoon.
However, just done a search on [keyword], and all competition has disappeared, so I'm assuming their CTR wasn't good enough... moohahaha :)
Chris
Whilst they are in the process of going bust, they take business away from those who knew that it would never work, who consequently don't get any business either - because by the time the current mathematically impaired #1 advertiser has gone bust there's another one comes in with an equally stupid and economically impossible bid to take his place.
AdWords should limit your maximum bid as a new advertiser
First off, how will they know you're new? I open new accounts all the time for people - yet adwords doesn't know it's me.
I do think that the max allowed bid should be based around the max paid bid to keep people from coming in and severly overbidding like that, or to limit the manipulation of the system.
Trouble then is how do you let the bid rise over time; without the aforementioned mathematically challenged person just raising you 1 cent into zero-profit land over the course of a few hours...
You'd have to be able to make jumps more than 0.01 - it'd have to be at least 0.25-0.50 over the current top bid, and at bids in the multiple dollar ranges, probably at least a dollar raise or more over the top bid.
It continually frustrates me that someone can walk in, bid quite high on my established keywords, and knock us all down to the right-hand side (with no premium spots anymore).
AdWords should limit your maximum bid as a new advertiser; forcing you to go through the ranks and learn where the profitability is to be found - rather than allow people to bid silly money on low conversion rate, low profit margin keywords and go bust within the week.
Poor dears.......
It continually frustrates me that someone can walk in, bid quite high on my established keywords, and knock us all down to the right-hand side (with no premium spots anymore).
How can you tell what your competitors are bidding? I can't see where you find that out on Adwords, unlike, for example, Overture.
You actually won't see exact figures for competitors on AdWords, kidekat. The reason for this is that your ad's position is not determined solely by what you pay as compared to your competitors. (Your CTR, as compared to your competitors is equally figured into the equation.)
So knowing what they pay is not particularly meaningful - although you can get an excellent idea about the 'going rate' by looking at the Avg.Pos (Average Postion) column of your stats, per keyword.
BTW, unlike on O, with AdWords it is possible for you to appear above a competitor who is paying more than you are - if your CTR is much better than theirs.
Basically, ad postion boils down to this: If you multiply your Maximum CPC times your CTR you will get a 'Rank Number'. Your rank number compared to that of each of your competitors, determines your position on the page.
AWA
I'm honored!
AWA
