How to bid on keywords from my PPC campaign

Adding a keyword to your ad group does not guarantee that your ad or ads will always be shown when that keyword is used in a search query. In fact, when you are advertising affiliate programs, chances are that several other search marketers are promoting the same program you are and will often select many of the same keywords as you. Your ads will have to compete with everyone else’s for position and for number of impressions (each time an ad is shown is an impression). Part of that competition is bidding. If you are willing to pay more than your competition, your ad will have a better chance of being shown more often and in a better position.

On some search engines, the bidding process is all that determines who wins and who loses, but with the performance-based search engines I recommend, there is another factor: ad performance, as measured by your click-through rate (CTR).

An ad with a higher CTR may appear more often and in a better position than an ad with a lower CTR, without necessarily costing you more. The bottom line, though, is that you do have to pay something, especially to get an ad started, and once you’ve created your ads and chosen your keywords, you will have to bid on those keywords to let Google or another search engine know just how much you are willing to pay for each click your ad generates.

You can bid on individual keywords or use a default bid for an entire ad group. Theoretically, bidding on each keyword individual could allow you to optimize your return for every keyword you use. Of course, you would have to track the performance of each of those keywords individually and calculate your return per click (RPC) and total return on each keyword separately to determine the optimal bid amounts. In practice, this is not very practical, and even with special software that’s available online to help streamline the process, you still have to do a lot of the work yourself.

The bottom line is, if you organize your ad groups carefully and the keywords they contain are similar in both relevance and focus (broad or narrow), then by setting your bids at the ad group level you will avoid the nightmare of tracking every keyword’s performance, and it should have very little negative impact on your actual earnings.

For now, let’s concentrate on deciding what our initial bid should be. If you recall, Commission Junction’s Advertiser List page included some columns called “3 Month EPC” and “7 Day EPC.” These are the gross earnings per hundred clicks, and most affiliate networks offer a similar statistic for each of their affiliate programs. If you assume your return will be somewhere near average keeping in mind a very good or very bad ad could be much higher or lower you might safely bid [1//100] of either of these EPCs (remember, the affiliate networks report EPC as earnings per hundred clicks).

If, for example, the EPC is 4.87 cents (4.87/100 = 0.0487, or roughly 5 cents), a conservative bid would start at either 4 or 5 cents. Cautious (or aggressive) bidders might start a little lower (or higher) depending on their comfort level, perhaps trusting more in their budget maximum to protect against a dramatic financial loss.

I myself will often bid twice the average return. I do this to more quickly obtain results on which to base future bid adjustment and also because I have begun to trust in my ability to produce returns that are, in fact, much higher than the average returns. I do not recommend you start like this, but if you meet with some success, you may begin to set your initial bids more aggressively over time. I will walk you through actually setting these bids very soon now, when we set up our first campaigns, but first we have one last subject to discuss. Namely, setting our daily budget.