Is it true that we have to set a CPC bid limit when we’re using automatic bidding?

The above question will be answered in the following paragraphs.

With automatic bidding, the Search Engine Marketing systems (like: Adwords, Adcenter & Search Marketing) adjust the bids automatically to earn the most clicks possible within the given budget. It isn’t possible to set a specific CPC bid. However, we can set an upper limit on the CPC bids for the entire campaign. This is the CPC bid limit. Specify a bid limit and the Search Engine Marketing system will never bid over the specified limit for any single click.

If it’s important for us to control the cost of individual clicks on our ad, it’s good to specify a CPC bid limit. Say if we sell a product that costs $5.00, we may wish to set a CPC bid limit of $5.00 maximum, so we never pay more than the maximum limit for a click.

By setting a limit we have more control over our costs, but we also may restrict the ad position or the number of click the ads receive. If we choose not to set a click price limit, automatic bidding will function the same way as it normally does, choosing whatever maximum CPC bids it determines will earn the most clicks possible within the set budget.

If a lot more control is required from our end on a day-to-day basis, manual bidding for clicks will be the best advised process to go for. Nevertheless for long campaigns & low budgets, Auto bidding is very useful.

Here are 3 key points which will help us understand the working of Automatic Bidding

• When you place a bid, you enter the maximum amount you’re willing to pay for the item. The seller and other bidders don’t know your maximum bid.

• We’ll place bids using the automatic bid increment amount, which is based on the current high bid. We’ll bid only if it’s necessary to make sure that we remain the high bidder, or to meet the reserve price, up to our maximum amount.

• If another bidder places the same maximum bid or higher, we’ll place another bid. Our maximum bid is kept confidential until it is exceeded by another bidder.

Contributed by Leo V J

We have been using our proprietary automated bid management software for over a year now and we’ve seen a vast improvement in productivity metrics and campaign results. Earlier most of the time we spent on an account used to be on bid management and reporting. Now that time has been reduced by over 30%! And we’ve been able to squeeze out more value from accounts that had hit a plateau.

Although the overall interest in bid management software seems to have waned over the last few years, there still seems to be a lot of debate online about the need for automated bid management.

Interest Over Time for ‘bid management software’ | 2004 – present

There are those who say that an in-house team doing manual bid management is better than buying a costly tool. They’re right in a way. We all know that PPC campaign optimization is more than just bid management. You need to monitor ad and LP performance while battling aggressive competitors and adjusting for seasonality, all the while keeping an eye on your profit margins. But they’re talking about small budget, minimal complexity campaigns. So it’s true that spreadsheet-rule-based bid management is enough.

As Ron Jones says, “If you’re spending less than $5,000 per month, then using the search engines’ bid management system may be all you need… you probably don’t have enough data for an automated system to make a significant difference. Automated tools do better when there’s a larger dataset to work with.”

We’ve seen that when working with our tool. We have taken on clients who spend very less, have few keywords or have keywords that don’t have much competition, most of which are ‘brand’ keywords, and we’ve struggled to get the account to scale up, or even provide enough value to justify the cost of the tool. On the flip side, we have seen that improving Quality Score goes a long way in getting more out of these less complex accounts.

But when you’re juggling hundreds of thousands of keywords across multiple search engines, and your competitor is breathing down your proverbial neck, a tool is essential to ensure you’re not leaving money on the table. And in the time saved you (or your SEM specialist) can work on other important aspects of PPC campaign management.

We’ve experienced this first-hand and want to share the findings with you. To learn how automated bid management can increase productivity and improve the performance of a manually optimized campaign by over 20%, attend our webcast on Oct 1, 2009 at 12pm PT.

Contributed by Amrita Ramkumar