• http://www.chadsummerhill.com ChadSummerhill

    Very interesting post, Siddharth. I am trying hard to wrap my head around Algorithms and Optimization white paper that you link to in your post. Thank you for including it!

    Is it correct to say that the portfolio method described in the white paper assumes a fixed budget and an overall campaign-level or account-level Max CPA provided by the advertiser?

    If so, is the job of the algorithm is to allocate that fixed budget across all the keywords in the account to maximize conversions/orders while still maintaining an acceptable Max CPA?

  • http://searchengineland.com Siddharth Shah

    Hi Chad

    The example in the paper assumes that the advertiser wants to optimize to certain goal subject to the constraint that her total spend for SEM cannot exceed a certain amount. So spend can float across campaign, ad groups, search engines across multiple accounts. The budget at the keyword level is not fixed per se, in fact its almost always better to have a very high budget cap at the campaign level so that you never hit. You have to model out the bid in such a way that you never hit the campaign budget cap , yet you dont spend more than you want. If you hit campaign budget caps Google throttles your ads and your performance will drop. But that is a topic for another post !

    You can also use portfolio strategies for several applications that are non budget specific such as profit maximization at floating budgets, optimizing to two or three metrics at the same time etc etc. If you are interested feel free to reach out to me.