Dayparting: Profitable Tactic Or Waste Of Time?
Hour of day bidding, or dayparting, has been the topic of much discussion of late. Advertisers want to leverage every possible trend to maximize their profits, and one way to do this is to take advantage of search engines providing advertisers with the flexibility to run their campaigns with bidding by hour of day. With […]
Hour of day bidding, or dayparting, has been the topic of much discussion of late. Advertisers want to leverage every possible trend to maximize their profits, and one way to do this is to take advantage of search engines providing advertisers with the flexibility to run their campaigns with bidding by hour of day. With such flexibility in bidding, it is natural to assume that hour of day bidding would be a big advantage. However, a careful analysis of the data shows that this is not the case for most advertisers. To illustrate, here’s a chart of hour of day revenue per click for the query “car hire:”
Looks like pretty compelling evidence that hour of day bidding is worthwhile. But now look at the chart below. It shows a campaign’s average revenue per click vs. the hour of day. It is clearly evident that the revenue per click shoots up by 80% in the early hours of the morning and then stabilizes in the working hours before falling off late at night. However, look at the click volume. It is very low in the early hours of the morning before picking up in the early hours. At 6 AM when the revenue per click (RPC) is very high, we get only 0.5% of the daily clicks.
Let us assume that by some sophisticated math, I figured out the right increase in bid at 6 AM and it increased my profit by 50%. The net increase in profit for the whole day would only be 0.5%*1.5=0.75%. Of course, this makes the assumption that I know the right bid. This is itself a difficult thing to do. Without sophisticated modeling it would be hard to understand the connection between bid, click and RPC for a given hour. Further, even if I could do the modeling, I most certainly could not do a good job modeling this for a tail keyword since they receive a few clicks a day, with most hours seeing zero clicks.
After looking at many hour of day datasets, I have come to the conclusion that hour of day bidding is not a big win for most advertisers. The wins at best are small, 0-1%. Further, given the sparsity of data, hour of day bidding strategies can only be used on head terms and the strategy will be heuristic at best. An example would be increase bids by 10% in this hour due to 10% better revenue per click.
For most businesses, hour of day bidding will at best give you a small incremental gain. In any case, it is best to look at all of your data, cost and revenue on a per click as well as aggregate basis before making any dayparting decisions.
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