Are You Wasting Your Money On Bid Management Platforms?

By April 13, 2016 Blog Feed No Comments

Bid management platforms can be very expensive; if you spend $10 million a year in paid search, you could be paying $250,000+ to utilize a bid management tool. Bid management platforms get a lot of publicity in the paid advertising industry about how amazing they are in terms of improving the efficiency of your campaigns, etc. From any agency standpoint, it is remarkable how many clients believe it to be their savior when it comes to hitting goals.

Bid management platforms consistently share case studies that show significant improvements for their clients after implementation. However, what is not always clearly explained is that their effectiveness increases significantly depending on how well your paid search campaigns are structured and the amount of data you have.

In order to really take advantage of that 1-3% of media spend you are charged for using their platform you need to lay the foundation for success, which includes:

  • A statistically significant amount of data
  • An optimal account and campaign structure
  • The right keyword portfolio
  • Properly utilizing negative keywords to
    • Exclude users with a low likelihood to convert
    • Direct users to the most relevant ads and landing pages
  • Conversion tracking that is set up correctly
  • Landing pages that have been tested and are proven to be effective at converting

If your paid search campaigns cannot check off all of the items above, you’re most likely wasting money on your bid management platform you’re investing in.

Statistically Significant Amount of Data

Advertisers that spend $1,000/month or even $10,000/month will see much less benefit from bid management platforms than advertisers spending $100,000/month or $1,000,000/month. Why? Bid management platforms need data to make bid optimizations. Generally speaking, the less you spend, the less data you have.

Another part of this point ties directly into my next point, which is the importance of account and campaign structure.

Optimal Account and Campaign Structure.

Many agencies and advertisers preach bidding on every keyword variation imaginable and in every single match type (broad, phrase, exact). This is especially a big no-no for low spending accounts as the more keywords you have and the more match types, the less statistically significant amount of data you have to make decisions. That is one reason why Fathom uses The Direct Path Approach. By utilizing fewer keywords, you ultimately have access to more data for both manual and automated decisions.

If your paid search campaigns consist of bidding on every single match type, you’re most likely limiting the data you have to make both manual and automated decisions.

The Right Keyword Portfolio

This is perhaps an obvious requirement—bidding on relevant keywords that are likely to convert. However, time and time again advertisers hop into using bid management platforms without the proper keywords in their account. And sometimes, when they are targeting the right keywords, they are not properly utilizing negative keywords to exclude users with a low likelihood to convert.

If you’re being matched with queries that are irrelevant to your business such as jobs, free, pictures, videos, etc. a bid management platform is going to lower your bids because your keywords aren’t performing. However, had you had the right negative keywords in place (and were utilizing the best match types), the opposite effect may occur and your keywords may actually be performing positively.

Finally, many times advertisers are bidding on the right keywords, have very granular ad groups but aren’t using negative keywords or cascading negatives to appropriately direct the users search query to the most relevant ad group. This means users are not getting an ideal experience from both an ad and landing page perspective, and therefore are less likely to convert.

Review your search queries and make sure you’re excluding negative keywords from the proper campaign and ad group.

Conversion Tracking Set-Up Properly

Many bid automation rules make decisions based on the conversions you are tracking. Needless to say, it’s important your conversion tracking is set up correctly and also tracking the right conversions.

Make sure conversions are tracking as they should before investing in bid management.

Tested and Proven Landing Pages

Perhaps the most underrated tactic to improve your ROI from paid search is testing and using proven landing pages. Very simply put, if you are not investing in custom landing pages (or have not tested landing pages), you should not be investing money into a bid management platform.

In fact, according to Omniture, “Online advertising that uses landing pages typically sees a conversion rate improvement of at least 25%. Testing it can double it.”

The conversion lift you’ll get from conversion rate optimization will be significantly higher than the conversion lift you’ll get from a bid automation platform.

Conclusion

Do bid management platforms work? Of course. Let’s not lose sight of that. However, are bid management platforms required to successfully run a very profitable paid search campaign? Absolutely not. In fact, there are several other aspects of paid search that are more important to running successful paid search campaigns than bid management platforms. Make sure those are in play before wasting your marketing dollars.

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Did you like this post? Let us know why (or why not) in the comments. In the meantime, check out our blog CMO-Friendly, CFO-Approved: The Direct Path Approach to Paid Search to discover how to move customers from impression to sale as quickly as possible.

About Joe Castro

Joe Castro is the Director of Online Advertising at Fathom. He has over 7 years of experience in digital marketing with a concentration in PPC/paid search and display advertising. He primarily works with healthcare clients, but his experience spans across all verticals. Joe is a frequent blogger for Search Engine Journal. In his free time, he enjoys working out and spending time with family and friends.

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