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How To Compute Smart PPC Bids (3 min video)

posted by | August 29, 2008 | 8 comments

If you find yourself wondering,

“What’s the best way to calculate PPC bids, so I neither overbid nor underbid on a term?”

and you have three minutes to spare, here’s a video for you.

The recipe:

  1. Predict the sales from each click on a given term (accounting for current daypart, seasonality, copy, matchtype, etc).
  2. Determine what fraction of sales you want to invest in advertising.
  3. Multiply those together.
  4. That’s the upper cap on how much you can bid on that term right now, if you want to stay within your efficiency target.

Despite what I say in the video, the rocket science and secret sauce is in step 1, not in the multiplication.
smiley

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  • Alan Rimm-Kaufman
    Alan Rimm-Kaufman founded the Rimm-Kaufman Group...
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    1. Bloggers Digest 9/4/08 | Get Elastic says:
      September 5, 2008 at 3:19 am

      [...] Rimm Kaufman Blog has a snappy 3-minute video that demystifies how to determine your optimal PPC bid range, where you neither overbid nor [...]

    2. Happy Birthday Google (Small Business E-commerce Link Digest - 9/12/2008) says:
      September 12, 2008 at 9:42 am

      [...] Rimm-Kaufman Group are among the smartest folks in the search marketing field. Their “How To Compute Smart PPC Bids” is a great 3-minute video providing valuable lessons for just about anyone doing search [...]

    3. How Aggressively Should You Bid In Paid Search? (3 min video) says:
      September 15, 2008 at 10:06 am

      [...] Also, here’s a link to part 1 in the same series, How To Compute Smart PPC Bids (3 min video). [...]

    4. A Prisoner’s Dilemma? PPC Advertising During The Current Financial Crisis says:
      October 20, 2008 at 12:12 pm

      [...] up. SPCs down. Profitable for Google, but a losing recipe for Google [...]

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      November 3, 2008 at 10:03 am

      [...] critical metric for many retailers for buying paid search advertising is sales per click (SPC). SPC captures both site conversion (the chance a visitor makes an order) and AOV (the average [...]

    6. Online Retail Stats: CyberMonday 2008 vs. 2007 says:
      December 3, 2008 at 10:05 am

      [...] this year versus last. Clicks grew faster than adspend, indicating lower CPCs, reflecting lower SPCs. Orders and clicks grew at the same rate, indicating this year’s soft sales were more due to [...]

    7. Click Volume Versus Click Profitability In Pay-Per-Click Bidding says:
      December 18, 2008 at 9:41 am

      [...] (Rambling digression: determining sales-per-click (or margin per click, or conversion, or whatever the relevant success metric ) is the true secret sauce of paid search bidding. SPC varies by phrase, by engine, by season, by matchtype, by day of week, by time of day. The big trick is getting SPC right in the long tail, where the data are thin. More on best practices for PPC bidding here.) [...]

    8. 2 Conferences’ Worth of PPC Lessons says:
      February 11, 2009 at 12:38 am

      [...] better before coming, because he obviously had many intelligent things to share. Here’s some more goodness. Can you tell I’m a [...]