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For example, if my EPC is 0.40 and I wanted to double the money I invest in my Adword campaign I would set my keyword bid to 0.20
This system isn't perfect of course and doesn't take into consideration the following:
- lowering the bid may result in a lower ad position which may lead to less clicks and therefore a lower overall ROI
- a higher bid may result in a lower EPC, however an increased amount of clicks may result in more sales and ultimately I higher overall ROI (despite the lower profit margin)
Ideally I am looking for a way to track and manipulate my keyword bids so that I can achieve the highest overall ROI. I do not mind lowering my profit margin if it means it will generate extra sales that will result in a higher overall profit.
Is there a software/system that can help me achieve this? I would assume that such a solution would need to track the performance of keywords across multiple periods of bid adjustments and to then compare the performance and overall ROI for each adjustment.
Thank you for your help.
So if you lower your bids, there might be less visitors. However the visitors on your site will have cost less in advertising, so it's really a thin line.
So the real question is, is there a tool that analyzes number of clicks, vs. number of sales vs overall profit, and comes up with the optimium CPC per keyword?
We’ve been looking for a similar (automated) tool forever - all what you’ve said without “recommended” bid. Just to know the ROI on each keyword.
When I said “automated” I meant automatically importing data from AdWords, MSN and Yahoo from one side and then sales (if you are merchant) or commissions (if you are an affiliate) from other side. Click… get the ROI for each keyword.
So far we found one product claiming doing that, but all should go through “their” server which was unacceptable for us.
Anyone who has resources would get good return on making something that would do this… as long as it can be installed locally.
You should stick with the sleep deprived thinking. ROI is much more important than gross profit.
If you want to maximize gross profit, bid as low as possible. This will ensure that your cpc is its lowest and given that you should have a constant conversion rate, you will have a maximum gross profit.
If you want to make the most money, maximize your ROI. That's a measure of how much money you make as a ratio of how much you have invested. Set an ROI goal; 100% ROI in this business is not excessive. Massive cash flow is a good thing, not a bad thing if you are maximizing your ROI.
Consider investing $1000 and turning it over 10 times per year at 10% profit. That's 100% ROI, but only 10% margin. Then consider investing $1000 and turning it over 5 times per year at 15% margin. That's only a 75% ROI. Would you rather make $1000 per year profit or $750 per year on a $1000 investment? I'll take the lower margin any day.
There are a number of solutions out there & which generally fall into two types:
1) Self-service bid management tools - these are for the most part web-ified Excel spreadsheets that look at impresion/click/cost/revenue/margin data and spit out suggested bid changes. Atlas Search, DART Search, Bid Buddy (UK) and Efficient Frontier Express (disclosure: where I work) fall in that camp. Of those tools, some automate the making of bid changes via SE API's, and some don't. The big short-coming of *most* of those tools, in my opinion, is that they only look at data keyword by keyword, which is to say that they don't look *across* keywords to figure out how best to allocate spend across a keyword set. Also, virtually none of the self-service bid management tools were built to do any sort of data modelling, which prevents them from being able to accurately tell you what the trade-offs are between max CPC, effective CPC, resultant bid position, traffic and conversions. Essentially, they don't do the math and force you to make your own guesses.
2) Outsourced SEM solutions - if you believe that an SEM agency with their own technology can do a better job than you, it might be worth it. Doesn't seem like you're thinking along those lines, though.
SearchCenter from Omniture will do this - if you're willing to pay $500/month to use the software (in addition to the fees you'll have to pay for their analytics software).