Bid War - What To Do?

[Dmitri010]

Hi everyone!

I entered into a bid war with one of our competitors. The keywords we are bidding on are not traffic heavy but are very targeted to our services. This war has gotten to a point, where I am bidding $1.00 and the only other bid (our competitor) overbids me with a $1.01 bid! This is totally ridiculous!

I don’t know what to do. I don’t want to stay in the first position for $1.00 because I am afraid our competitor will just click us out of our budget. I don’t want to drop out either.

What to do? Any advice would be greatly appreciated!

[KevinC]

what is the bid below you cost? If the bid below you is something like $0.50 then if you bid $.01 below the top guy you'll force him to pay full price while you'll only pay 1 cent higher then the guy below you. Did that make sense?

Lets say the bids are as follows:

#1 - $1.01
#2 - $1.00 - your bid
#3 - $0.50

You'll end up only paying $0.51 while the top guy gets stuck paying full price - let him have the top spot.

[webwoman]

Are you willing to scare him off with a say...$10.00 bid? You'll only have to pay .01 more than his bid - unless he bids $9.99. I do this often for one of my clients, but I know who will call my bluff and who won't.

The other thing you can do is contact the competitor. I am managing an Overture campaign for one client who has gotten together with his 2 main competitors on some agreed upon bidding strategies. We have an understanding that keeps our 3 sites at the top without the silliness of bidding wars. It's all very civilized...until an intruder shows up - but we have a plan for those too :)

[ogletree]

Get PPC Pro it will do it for you. I wish my wars were around a $1. Most of mine are $10 and more. I got a few near $30

[Web Footed Newbie]

Collusion, Webwoman, is a great idea, but it is a grey area IMO as far as being legal. Any attorneys here that can shed any light on that?

I wouldn't do it without some legal advice, BUT it is a great idea!
WFN :)

[webwoman]

Geeeez...I sure hope it's legal. The websites that are involved in the collusion with my client are all law firms!

[Web Footed Newbie]

Ah, that explains it! Everything is legal in a law firm (until you get caught, I suppose!)
Funny who things are sometimes.

As for the bid war, let the competitor do the worrying. Just pay less, take #2 or #3 position, BUT WRITE A BETTER AD, the best ad you have ever written. You will get more clicks, make more money, and drive your competitor crazy. Then, change your killer ad copy every week with another better ad, especially if he copies your first ad!

Hope that helps, WFN :)

[Dmitri010]

Thanks for all the advice!

I also thought that collusion was also in the grey, but I’ll give it more thought (especially if the lawyers are doing it).

My story is simple – I was the only bidder for the terms at 0.05. Then this company came and naturally bid 0.10. I went to 0.15. He to 0.20, etc. Now I am at 0.99 and he is at 1.00. So, effectively I am paying 0.10 cents while he is paying 1.00, but now there is a third company that is overbidding my "first" competitor. Now I am in the third position, which in the results (Yahoo for example) appears at the bottom of the page :-(

Should I start overbidding them until it gets to say 2.00 and then bid for the third position?

I will work on the copy some more though – good thing they do not copy and write their own (sometimes without the keywords in the body).

[Cipher]

Easiest thing to do is as Kevin C says. Although I think this only applys to Overture unfortunatly. Still it enables you to both scare someone off and also raise there budget without affecting yours. It is also useful for those companies who have a whole range of bids accross the board at $xx as you can make sure they pay the max because they asked for it..!

Im not that nasty but I know it can be frustrating sometimes especially if they are offering a product or service that is either of a low quality or is perhaps (it happens) that the site in question has no relevant information on it.

[webwoman]

Personally, I would be perfectly happy with position 2 or 3 unless my competitor had a better site than mine. In which case, I would make a better site.

[Cipher]

I would tend to do the same thing as the fact of the matter is most of the partner sites only display the top 1-3 listings anyway so no matter what unless they buy at first glance your going to get clicked on anyway. Same applies write killer ads, attract attencion and have a site worthy of that attencion and you will reap the rewards of your labour. There is absolutly no sense in paying 200$ more than the person 2 places back from you for a 1st place spot. If you want that slot that badly do it the cheaper way and get some seo done (obviously its not that easy).

[Dmitri010]

I am already at the point where there are ONLY 3 bidder where:

$1.01 - Competitor 1
$1.02 - Competitor 2
$0.99 - Me

That is why my ads sometimes appear at the 23rd place because they are at the bottom of the page: after 2 Overture ads + 20 regular search results from Yahoo – then mine.

I think that I’ll just bid them to the limit and then stay at the third position. Thanks for all the advice!

[Chndru]

How much is competitor 4 & 5 bids at, would be a crucial info, imo

[Dmitri010]

Chndru,

That is the problem - there are NONE. There are only 3 of us bidding at 1.01, 1.00, and 0.99!

[Cipher]

I would suggest you just drop your bid to 10c then because its not going to make a great deal of difference besides fattening up your pot of cash in Overture. Let them fight it out and waste their money and when their funds have gone it should be plain sailing. Just keep checking and hoping. Alternativly find some more keywords and get traffic from elsewhere.

[pageoneresults]

Okay, now surf the gap. If you are using bid management software, set your fall back rank to 3, set your max bid to $.01 less than the number one spot. Let those two deal with the $1.00 clicks while you are surfing the gap at $.10!

If you are using bid management software, you may want to set up your 24 auto bids in a strategical way. What are the best selling hours? Once you know that, then spread your 24 auto bids amongst those hours.

[Croke]

Just joined up and man do I have much to learn. Quickly, what bid management software? Is it worth it?

Any thought on where to go to find out about writing killer ads?

Have people seen a difference of moving up to 2 and 1. I hang at about 3 on most of my bids. I know for yahoo it puts me below the page. But should I spend the extra to move up?

[GodLikeLotus]

Its all about getting a ROI, some of my advertisers are paying around $3.00 a click-through to Overture but they can all still make good profit per sale and will therefore bid higher if and when needed.

[too much information]

For a while I was going after the new guys that would jump in $1 over the highest bid (probably not the business itself bidding, but a third party that they hired anyway). I thought it would be a good idea to bid 0.01 below them and wait for them to drop out or down, but what ended up happening is all of the rest of the group started fighting for the spot as well, and now we are all stuck around $2 higher than where we were.

So I changed my theory on this stuff. I dropped all of my bids as low as possible so that I still stay at least at #5. I wrote some really good ads and found some keywords that nobody else was bidding on that actually return more visits than the more competative terms even though they are not searched as often. Funny thing is I'm still spending the same ammount in clicks per day at the lower bids, you know what that means? More Clicks!

Here's the real trick to Overture. Don't throw money at it, don't fight for the top position, just find out what ads work for you, make sure they are on the first page and find those great keywords that nobody else is bidding on.

[guisepi]

Just joined up and man do I have much to learn. Quickly, what bid management software? Is it worth it?

You might want to try BidRank for management of your ads - been very happy with the updates to the software over the past 12 months and the simple interface - don't be afraid to utilize the optional settings if you give it a try

[Jack_Frost]

Webwoman,

Price collusion is against the law. Of course like everything else it is gray and someone must prove that they were damaged in order to collect. It goes on all the time in a number of industries and nobody thinks about it.

There was a huge case here in St. Louis regarding Archer Daniels Midland, a multi billion dollar agriculture commodity supplier. It was all involved with price fixing. One of my good friends dad's was an executive there. While not involved in the scheme, the FBI sure kept a presence watching their house and interrogating their family and a lot of the other execs got punished.

I'd be careful...all you need is a fourth firm to enter the mix figure out what you are doing and they could make a big deal about just for the bad PR it would cause their competitors. Further, if you are the SEO, I'd make sure you have your back covered. The last thing you want is for them to say that you did it on your own.

Good luck

[SlyOldDog]

Yes, especially if the fourth firm are lawyers too!

[Kukenan]

I know price collusion is against the law when you agree to fix a higher price to charge consumers.

But this case is reversed. Is it also illegal?

[skibum]

I am bidding $1.00 and the only other bid (our competitor) overbids me with a $1.01 bid!

If its only you and one other company bidding, why not just settle for #2. Being #1 is often over rated IMO. You'll still get all the desired syndication.

[hannamyluv]

I would say, bid what you can afford. Don't let ego make you think you need #1. You said yourself that there was not much traffic. Of course, I would make sure my bid was just a penny shy of theirs. I mean, there is no shame in letting someone else's ego cost them too much. ;)

[natim]

Collusion is absolutely against the law. How many times that people within a profession are the worst offenders.

If you have the time, you can pick your spots to drive your competitor nuts.If you have tracked your clicks and know when the volume is the best, go in and take #1 for a few hours then back off. If you competitors aren't watching as you are it will drive them nuts.

Also the advice you have been given about writing better ads and picking the 3rd spot is very good advice. I had competitors who try the same thing but I keep .01 or .02 behind and force them to pay the highest price. Try picking your spots, it will make them crazy.

[the_beest]

Let me reinforce what GodLikeLotus posted; it's all about ROI. Calculate your metrics: how much you make on a sale, or how much you pay for a lead, what your conversion rates are etc.

From that you can work out the maximum you can pay per click, and stick to that - don't be led by the market. Use bid management software to help you spend efficiently.

Remember, the idea is to get traffic at a CPC that makes you money. It's not a competition to see who can be number 1.

[ogletree]

There is nothing wrong with number 2. In some situations number 4 is not bad when they show the first 4 on the top. That is not often enough though.

[Dmitri010]

There is nothing wrong with number 2.

But I am number 1! Seriously, I understand and it is ok for me to be number 2 or 3 or 4.

ROI you say? Not for me. We are a consulting services company; ROI is virtually impossible to calculate with any degree of accuracy for this kind of advertising.

Great advice – thanks!

[rogerd]

Webwoman, I'd be cautious about this issue, particularly if you are managing the bids. I doubt if there is case law yet on rigging of PPC bids, but to my non-lawyer mind it sounds like a "combination in restraint of trade". Imagine a city with three supermarkets and one apple-grower who couldn't quite fill demand. To avoid bidding against each other for the limited supply of apples, could the store managers get together and agree on a maximum price they would pay the farmer? I think not...

Beyond legality: one thing I haven't checked is the Overture boilerplate, but my guess is that they put some language in there about collusion, fraudulent bids, etc. Thus, even if the behavior was legal, it might be a contract violation.

Liability on your part could occur if you are managing the bids for one or more firms or are otherwise involved in the process. I wouldn't assume that nobody will ever find out - a disgruntled clerical person at one of the firms might blow the whistle (along with turning them in for those unlicensed copies of MS Office the summer interns are using ;)).

If this is indeed price fixing, then I think Overture could probably sue for treble damages, too.

I'd consult an attorney, but not the perp(s) in this case! If you get trustworthy advice that this scheme isn't kosher, distance yourself from anything to do with the bidding.