What is Bid Management?

Jessica Saras

Bid management is a search engine marketing tool that is used to achieve higher rankings on the search engine results page (SERP) for sites like Google, Yahoo, and MSN. Unlike traditional search engine optimization practices, bid management techniques are employed in paid campaigns, or pay-per-click (PPC) ads. To properly understand bid management, it is important to first understand the way PPC advertisements work.

Pay-per-click advertisers must find the best keywords to maximize their return on investment.
Pay-per-click advertisers must find the best keywords to maximize their return on investment.

When a person performs an Internet search, he or she is given a list of results that the search engine has deemed relevant. This list of results usually includes natural results and paid advertisements. The natural results are often located in the middle of the page, while the paid advertisements can be found at the very top, bottom, and/or right side of the page. These are paid advertisements, so each time someone clicks on the ad, the website owner is charged for that click&mdahs;this is why it's called "pay-per-click" advertising.

A keyword bid tool is a piece of software that helps busy managers implement bid-based pay per click advertising strategies.
A keyword bid tool is a piece of software that helps busy managers implement bid-based pay per click advertising strategies.

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The amount the website owner is charged depends on the keyword that was used to find the ad. For example, if the searcher typed in "bid management," that is the keyword that triggered the ad. Since the website's ad was listed on the results page, that means the website is bidding on the term "bid management" and is therefore willing to pay a set amount for each click the ad receives when someone searches for the term.

There are many different websites competing for space on the results page, so the search engines must list, or rank, the ads in a specific order. Naturally, everyone wants to be at the top of the page, since these ads are the first ones that users see and are more likely to be clicked than those further down the page. Rather than randomly listing the ads, the search engine instead lists ads according to how much the website owner is willing to pay for the click.

When someone sets up a paid campaign, or PPC ad, one of the first things he or she must do is decide what keywords are relevant to the ad and then bid on them. The starting bid depends on the popularity of the keyword—more common keywords tend to have higher starting bids. The person setting up the ad then determines the maximum amount he or she is willing to pay for that keyword and provides that information to the search engine. This is the maximum bid for the keyword in question.

After this, a bidding war ensues between all the other websites bidding on that particular keyword, and the ad with the highest bid is given a higher ranking on the search results page. Unfortunately, there's no way to know how much another site is bidding for a keyword, so bidding can get tricky. That's where bid management comes into play.

Bid management is the art of researching which keywords are the most important for a website's PPC ad. To determine this information, the website must track its conversions, the number of visitors who performed a desired action, and then figure out which keyword brought about the most successful conversions. With this information, the person in charge of the marketing campaign can determine which keywords are most successful and should have higher bids.

Successful bid management techniques require a great deal of time of effort, and the process can be challenging to even experienced search engine marketers. For this reason, many people prefer to use bid management software, an automated system that tracks conversions and clicks, compares them, and then adjusts bids based on this information. Whether a company prefers to use automated software or to manually track the information, it must employ bid management techniques in order to run a successful pay-per-click ad.

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Discussion Comments


As a 'newbie' web marketer, I have been reading quite a bit about PPC bid management, and looking into different bid management tools. The whole thing is fascinating; it's a science in and of itself.

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