Paid Search Strategies: Entry Bids (Max CPC for New Keywords)

February 12, 2009

Digital Marketing ChannelAdvisor By ChannelAdvisor

Within the Search Services group here at ChannelAdvisor,
there has been a lot of discussions around Entry Bid Strategies.  Entry
Bids are the initial Max CPC’s that you launch new keywords with.  The
initial bid that you assign to new keywords actually has a huge effect on your
campaigns and to the potential opportunity of each of those keywords.  If
you are launching ~1,000 new keywords every month, that can add up to some
substantial Cost that can really have a negative effect on your ROI.

I believe the general consensus out there is to launch new
keywords somewhere within the first 5 positions to see if the keywords can
perform at a high position right out of the gate.  However, if you are
using an Automated Bid Manager or even doing the bidding yourself, it could
take a decent amount of time until you or the bidding algorithm finds the
sweet-spot.  During this time where you are trying to find the sweet spot,
people are clicking on your ads and you are paying for all of that traffic.

My recommendation is to spend some time and establish an
entry bid strategy to launch all new keywords.

A few strategies we have discussed are:

Margin-Based Entry Bids

Take a look at your product margins and create 3-4 tiers
(ex- $0-$15, $15-$25, $25+) and using your average Non-Brand Conversion Rate,
determine where you should put those bids for each Margin Tier.

Target Entry Bid

Pull a Non-Brand Report for the last month or so, and use
the following Target Bid formula to calculate where your CPC will need to be in
order to hit your ERS or A/S (Cost/Revenue)objective.

(Clicks/Revenue) * ERS Goal

Do you have an Entry Bid strategy?  Please share!

Written by Andrew Belsky (andrew.belsky at channeladvisor dot com)