#SMX #11B @sdey

Optimizing Bidding for different Scenarios

Bidding Models Complex

& Simple

#SMX #11B @sdey

Developing a Bidding Strategy

Whatdoyouwanttodo?

1.  BrandedvsTransactional2.  ReachvsEfficiency3.  CPAvsCPC

#SMX #11B @sdey

Target: Maximize Volume

•  ConcentrateonkeywordswhichhavelowCPCbuthighvolume

•  Querieswithlowertransactionintente.g.Facebookcansustainhugetrafficevenat0.01$

•  Biddingbecomeslessimportantinsuchascenario,budgetmaintenancebecomesmoreimportant

•  BidtogetTopofPage

#SMX #11B @sdey

Target : Get revenue & new customers from spend

•  Setupefficiencytargets&budgets•  Gofortransactionalkeywords•  Couldbelowervolume•  Minetailkeywords

•  Biddingisthemostimportantpartofthisstrategy

#SMX #11B @sdey

Theory of Bidding, Cost, Revenue & Efficiency

Bidding Theory

#SMX #11B @sdey

•  Clicksincreaseasbidincreases(linear)

•  Revenueincreasesasbidincreases(linear)

•  Costincreasesasbidincreases(quadratic)

•  Efficiencyincreasesasbidincreases(linear)

How does efficiency change with bids

bid

#SMX #11B @sdey

•  Maximizevolumewhilehittingefficiencytargets

•  Profitisnotthemetricweareoptimizingfor

Aim of the game : Hit target efficiency

#SMX #11B @sdey

•  PLA•  Revenuefollowsalogitfunction

•  EGRfollowsacrazyslope

•  BroadMatchKeywords•  Costfollowsanexponentialtrend

withbidincrease•  Revenuefollowsalogtrendwithbid

increase

Not all keywords or programs are created equal

#SMX #11B @sdey

Implementing Basic Bidding into an account

The Basics

#SMX #11B @sdey

Revenueperclickx

Efficiencytarget

OR

RevenueperclickROAStarget

Bid Calculation Basics for a Keyword

Measures•  Revenuelast30days

•  Clickslast30days

Parameters•  Efficiencytarget(EGR)•  cost/revenue

•  ROAStarget•  revenue/cost

#SMX #11B @sdey

•  Differentproductssellatdifferenttimes.

•  Useexponentialdecayonrevenueandclicks.

•  RevenuefromNdaysagohasdecay^Nweight

•  Startwith0.95decayfactor

Seasonality : Use exponential decay

#SMX #11B @sdey

•  Downjackets&sweaterssellthemostfromNovtoJan

•  ThesalesvolumedecreasesbyhalfattheendofFeb

•  Withoutadecay,thebidswillfollowseasonaltrendsveryslowly

Seasonality : Use exponential decay

YEAR

#SMX #11B @sdey

•  Differencebetweenbid(maxcpc)&cost(avgcpc)

•  Bidshavetobeincrementedbyabidheadroomfactortopreventhyperefficiency

•  Bidheadroom=maxcpc/avgcpc

Bid headroom

#SMX #11B @sdey

•  Sayyouwanttopay$.90/click•  Bidupat1.10$

•  Bidupby20%

(maxcpcxclicks/cost)

Bid headroom

#SMX #11B @sdey

•  ChooseatimeperiodtocollectRevenue&Clicks(30days)

•  Keywordswithclicks>threshold(100clicks)canbebidwithindividualinfo

•  Bid=revenue/clicksxefficiencytargetxbidheadroom

High traffic keywords

#SMX #11B @sdey

•  Groupmultiplekeywordstogetenoughclicksaboveathreshold

•  Groupingcanbebasedonadgroup&campaigns

•  Groupingcanbealsobasedoncategoryofthekeywords.

Low traffic keywords : Grouping keywords

#SMX #11B @sdey

Low traffic keywords : Grouping keywords

•  E.g.groupelectronicsintoasinglecategory

•  GroupApparelsintoasinglecategoryifneeded

#SMX #11B @sdey

•  Increasedaterangeforlowtraffickeywords•  Lessfrequentkeywords:longertimeranges•  Bewaretoolongtimerangescan’tfollowseasonality

Low traffic keywords : Increase date ranges

#SMX #11B @sdey

Issues to keep in mind while implementing a bidding strategy

The Troublemakers

#SMX #11B @sdey

•  Keepalookoutforbadsearchqueries&keywords

•  Iftheyhavelowerbids,theywillreducebidsforthegrouptheyareclusteredin

•  Solution:Negativekeywordthemorbeaggressiveintheirbidreduction

Keywords which don’t convert

#SMX #11B @sdey

•  Additionofbidmodifierswouldupsetyourbidding

•  Anegativebidmodifiertendstomakeyouhyper-efficient

•  FinalCPCarenotequaltowhatiscalculated

•  Solution:measuretheoveralleffectofbidmodifiersonCPCandadjust

Bid Modifiers

#SMX #11B @sdey

•  Remarketinglistsforsearchads(RLSA)•  +100%increaseforprevious

visitors

•  Bidissetat1$,butCPC>1$•  Solution:Figureouthow

audiencesaffecttheCPCintotal

Bid Modifiers

#SMX #11B @sdey

Machine Learned Models for Bidding for an ecommerce

Advanced Bidding

#SMX #11B @sdey

•  TransactionalTextAdsBidding

•  CampaignStrategycenteredoneitherlandingonProductPageorSearchPage

•  ModeledintoaMachineLearningProblemwithtargetsasrevenueperclick

Advanced Bidding for Ecommerce

#SMX #11B @sdey

Targetfeature:FutureRevenuePerClick

InputFeatures:•  HistoricalRevenuePerClick

•  Margin&Price

•  Discounts

•  Matchtype

•  KeywordRelevancetoProductTitle

Performance:•  Revenueliftof+20%withcostincreaseof+10%ascomparedtobaseline

Predictive Modeling at a keyword level

#SMX #11B @sdey

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THANK YOU! SEE YOU AT THE NEXT #SMX