Can/will I still be outbid?

[foolarama]

Hello to the group, I'm a business owner tripping into the adword pool for the first time. My question is this...because of our extremely anal practice of keeping overhead costs down, our profit margin per sale is much higher than our bigger competitors, and stubstantially higher than other local, smaller competitors, about 25-50%, based on conversatins with friends/competitors in the industry.

Is it likely I will be outbid on the best keywords? Assuming I keep my account in line (good QS etc) how can other companies afford to pay more than I can for the best keywords?

[tangor]

One should never underestimate the number of bad business folks out there. Most likely the majority will not try... but do not be surprised if some make the attempt.

Meanwhile, welcome to Webmasterworld!

[buckworks]

Keep in mind that if someone is ranking higher than you are in the AdWords column, that doesn't necessarily mean they're outbidding you.

Someone who has a tightly optimized account and strong clickthrough rates can rise in the ranks by outsmarting the pack, not just by bidding higher.

[RhinoFish]

hey, foolarama, watch the video here:
[adwords.google.com...]

it explains how the auction works - a GREAT place for anyone to start learning about how to do better with AdWords.

have fun!

[foolarama]

Thanks for the responses. I plan on maintaining a very tight account, at least in the initial stages. My competition's adds appear frequently and the adds seem irrelevent to what I've searched on. I feel confident that I can maintain a higher QS than they do (there are several). Hopefully, there not overbidding just to keep the smaller businesses out of the market. That was really the jist of my question.

[netmeg]

To keep your costs down initially, make sure you're NOT using the budget optimizer (starter edition) that Google suggests. Either run your campaign Search Only or separate the Search and Content into two separate campaigns, and bid them separately. And if you are running ads in the Content Network, go into the Tools section and look for the Site and Category Exclusion tool, and check off as many of those categories as you think won't make you any money. Particularly video networks and social media networks - unless you're marketing specifically to that demographic. I can't tell you how much money I've seen people pour into youtube and myspace without realizing they were doing it.

[eWhisper]

Good tips from Nutmeg.

However, I think the answer starts with defining the 'best keywords'.

I define them by conversion metrics (cost per conversion or conversion rate).

However, its common for businesses to define them as the ones with the highest search volume or ones they think reflect their business.

The second point I'd like to add to the above advice is to calculate lifetime visitor values. If you look a single sale and set bids, and someone else sees that someone buys 3 times over the course of a year and uses the combined revenue to set their bids, then you could easily be outbid even if your have tighter control of your overhead costs.

[netmeg]

(that's NETmeg, uwhisper! ork ork)

The second point I'd like to add to the above advice is to calculate lifetime visitor values. If you look a single sale and set bids, and someone else sees that someone buys 3 times over the course of a year and uses the combined revenue to set their bids, then you could easily be outbid even if your have tighter control of your overhead costs.

Boy howdy I wish more people would keep this in mind. I finally have some of my clients trained not to flinch at higher per-click values, because I can show them that over the course of a year that customer will come back and buy again four or five times on their own. The three or four dollar click looks like a pretty good deal at that point.

But of course, it doesn't work for everyone. I have other clients who are only likely to sell once and that's the end of it.

[buckworks]

I define them by conversion metrics (cost per conversion or conversion rate).

However, its common for businesses to define them as the ones with the highest search volume

The workable balance is usually in the middle somewhere. For a product I'm involved with, there's a deliciously profitable search term that converts several times better than anything else on our list ... but it doesn't get many searches in a day.

It's important to identify those little gems and work them hard, but one's bread and butter often comes from more general searches simply because there's more of them.

[foolarama]

Thanks for the great tips. Unfortunately, I am one of those that will only see my customers once...its the nature of my business. I'm up against some extremely large companies with budgets that are orders of magnitude greater than mine. But head to head with one customer, they are usually 50-100% higher for the exact same products and services. I'll keep the advice given, and appreciate all the responses.

[netmeg]

I'm up against some extremely large companies with budgets that are orders of magnitude greater than mine. But head to head with one customer, they are usually 50-100% higher for the exact same products and services.

Then you need to be able to write really really good ads that convey that in 25/35/35 format.

[Channel01]

Welcome to the world of Paid Search. You'll soon find that advertisers who have little clue what they're doing will represent as much, if not more of a challenge to you as those competitors who run tight knit, well optimized campaigns.