Don’t Hate Me Because I Outbid You: 3 Reasons Why My Bid Management Solution Is Better

Kye Mou
February 11, 2014

The difference between a good, serviceable bidding solution and an optimized solution is the difference between okay results and record campaign ROI.

There are many factors enterprise advertisers must consider when evaluating a bid management solution: algorithmic or rules-based; portfolio- or goal-based; bidding with limited data or intra-day bid adjustments. These and other features address business requirements that ultimately impact the ability for advertisers to drive revenue at a profitable return—publisher tools, in-house solutions, and multi-channel platforms attempt to provide some or all of this functionality.

There are three fundamental attributes found in all effective bid management solution that enable advertisers to remain competitive in any auction landscape: transparency, flexibility, and a systematic approach to forecasting.

1. Transparency

Visibility into how a keyword’s bid is calculated is critical to understanding the performance metrics and auction conditions that factored into the final bid. This ultimately justifies the calculated bid rather than relying on a “trust us” mentality and gives insight into future performance. To provide complete transparency, bids and statistical models should be exposed at each step of the calculation. Marketers must have access to the amount of historical data used, including the time window, how conversions or revenue tracked next to defined business goals, and what auction thresholds and bid settings were met that impacted the final bid calculation.

Though many enterprise platforms provide transparency into bid calculations, some more than others, tools like Google Conversion Optimizer (GCO) don’t expose how bids are calculated. These “black-box” algorithms provide little to no transparency, leaving advertisers in the dark and at the mercy of the tool. Even when GCO is disabled, keywords bids revert back to the original bid prior to enabling the tool, leaving marketers high and dry with old, sub-optimal bids.

2. Flexibility

Despite the demand for complete automation, flexibility remains one of the most important pieces of any effective bid management solution. Though algorithms assume the lion’s share of work, marketers still require flexible user controls and the ability to factor in any source of data when calculating optimal bids. Defining CPC ceilings and floors, limiting how reactive bids are to seasonality and cyclical trends, overriding individual bids to satisfy business requirements, and excluding outlying data from calculations are all controls marketers need to adapt bids to ever-changing market and auction conditions.

With accurate, timely and relevant data, that make sense to an advertiser’s business, bidding algorithms can effectively calculate bids that maximize performance. This level of flexibility exists beyond most bid management tools and is available in only the most sophisticated platforms. Multi-event conversion tracking, visibility into customer lifetime value, attributing latent conversions, and factoring in analytics, ad serving, call tracking, CRM, and backend data enables marketers to optimize spend, drive high value customers, and acquire more revenue.

3. Systematic Approach to Forecasting

Marketing effectiveness is hampered without the ability to evaluate the potential impact of shifts in business goals. Furthermore, some auctions are extremely competitive and volatile, with suboptimal bids negatively impacting overall program performance. To mitigate risk, effective bid management solutions must provide marketers with a systematic approach—guiding marketers through the business impact of any changes in bid strategy.

The ability to preview calculated bids alongside visual overlays helps advertisers understand the potential effect of new bids and evaluate risks. Even more powerful is the ability for marketers to build “what-if” forecast models of how changes to performance goals will affect volume, cost, return on investment, and profit. With accurate forecasting models, marketers can focus on evaluating budget allocation across publishers and business lines to maximize performance and achieve business goals.

Selecting the Right Solution

Bid automation is growing increasingly complex and more types of media are becoming biddable. In the face of unique business requirements, dynamic marketplaces, and competitive auctions, advertisers increasingly must look to bid management solutions that provide transparency into bid calculations, the flexibility of user controls and data integrations, and a systematic approach to forecasting for mitigating risks. Solutions characterized by these three fundamental attributes meet the business requirements of today’s most complex and sophisticated advertisers, and enable them to drive more revenue with increasing efficiency.

Sign Up and Get Updates by Email
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.