3 Ways To Optimize Your Bidding Strategies

If you’re managing multiple SEM programs across a broad landscape of web assets, as more and more of us are, it’s important to realize that when it comes to managing keywords and their bids, it’s not one-size-fits-all. In this reality of diverse business goals and revenue models, marketers looking for a singular approach to SEM program management will be sorely disappointed.

In the past I’ve talked about the fact that at Yahoo, we have many different properties (think Yahoo Personals, Yahoo Sports, Yahoo Shopping, etc.), and each of these properties has a business that’s unique in it’s own way. Some properties are supported primarily by display media (Sports, Finance, News, Etc.). In others, users can subscribe to services (web hosting, merchant solutions). Yet other properties list products sold by other vendors e.g. Shopping and Travel. Since each of these businesses has a different way of making money, for each property we need a unique way of defining the value that a user can bring to the company. I went into much deeper detail tn this topic of customer valuation a while back.

But what about SEM campaign management? How do you manage different SEM programs for a diverse set of businesses? It turns out that each type of business requires a unique approach to SEM program management, particularly as it relates to keywords, targets and bidding. Let’s look at the following 3 examples I pulled straight out of the trenches.

Keeping it simple

For our branding campaign, as I wrote a few months ago, our goal was to deepen engagement with the Yahoo brand and products. We were able to track and measure engagement through a proxy of web events to which we assigned points to define relative value. In executing against this goal, we (with the help of our agency) managed to a cost per point or cost per value model on a keyword-by-keyword basis. We did this on a fairly manual basis, as the keyword set was finite and manageable, and performance was fairly stable. This is the simplest of examples I can provide from purely a bid management perspective.

The tail wagging the head

In our orders-based businesses, where we’re driving users toward a common conversion point such as a subscription or sale, we (again, with agency assistance) use a somewhat more complex management strategy that is now gaining traction in the industry, though we’ve been employing it for some time. We try to break up our keyword portfolio into the smallest possible discrete datapoints that we can, while maintaining a sufficient quantity performance data for bidding purposes. For example, a high-volume keyword such as “dating” gets broken down into bits that look like “dating on exact match in Chicago during nighttime hours with a value-focused call-to-action ad,” and so on. Bids can then be managed on these micro-units so the campaign can be optimized to a level of efficiency not possible when managing solely at the keyword level.

Kicking it up a notch

For our listings properties, where users come in, research products and services then leave, the model is completely different. For one thing, our revenue is mostly earned in-session (as opposed to a 30-day conversion window, for example. To make matters more complex, we have keywords of every type that number in the millions. High volume, seasonal, long tail—you name it.

To get the most out of these programs, we must deploy multiple management strategies within a single program. For head or high-volume keywords, we can employ automated bid management algorithms to optimize to a desired business metric—revenue, profit, ROI, etc. For other keywords we need to take a more rules-based approach. For example, we may want to take all the keywords that fit a certain profile—ranks on the second page, has above 100% ROI, etc. and perform calculated bid management techniques—bid a percentage of revenue or profit, increase bids by 20%, bid to higher position, etc.

As if that weren’t enough to worry about, for seasonal and other reasons, at any given time we have a large number of keywords that aren’t getting any impressions at all. In cases like this we periodically “re-activate” keywords and try to bid them back to profitability once again (it’s assumed that we bid them down to inactivity at some point because they weren’t profitable). This takes a measured, rule-based approach to qualify and bid systematically to ensure the best chance at regaining profitability.

As you can see, as the landscape across which you’re managing SEM campaigns becomes increasingly varied, the more complex and custom your approach to search marketing will need to be. It’s only when you can match your businesses one-to-one with uniquely suitable approaches that you’ll be able to bring your ad spend to a truly optimized level.