By Adam Goldberg

One of the sessions that I found to be the most interesting was titled “Managing Automated PPC Bid Management.” I, like most of the people that attended this session, expected to hear about how great Automated Bid Managers (ABM) are and how they operate. Instead, each panelist spoke about how ABMs are not the end all-be all (you cannot set them and forget them) and that they are all inherently flawed. Each presenter had an interesting slant on the topic and there were some key points they all agreed with.

The first speaker was Brad Geddes from bg Theory. He spoke about 7 methods one can use to increase the profits earned from a website, one of which was bid management. He showed examples for other profit increasing tactics, such as increasing your quality score (QSR), conversion rate, average order value (AOV), profit per sale, adding negative keywords, and adding new keywords can increase your bottom line much more significantly then merely changing bid prices.

The second speaker was David Szetela, the CEO/President from Clix Marketing. David spent some time talking about Google’s Conversion Optimizer, which is a free tool. For the right type of user, David said this tool can add value. He admitted that the Conversion Optimizer, like most bid managers, is only looking at the last ad clicked, achieving a CPA or CPL, does not track offline conversions, and does not react in real-time. David had one key suggestion for Google that would make their conversion optimizer better. His suggestion is to open up the tool’s API so that companies can import data into the conversion optimizer’s decision engine that Google does not currently have, such as profit and offline conversions.

The final speaker was Anton Konikoff, the CEO of Acronym Media. Anton is a self-admitted lover of technology and his agency uses a lot of it. However, he is not a fan of automated bid managers. He for one does not like the ‘black box’ aspects of them. This is where they are making bid decisions but no one really understands why it is acting the way it is except for the engineers that built the bid manager. He knows the best way to increase performance for his clients by manipulating bids is to have human beings manage the bids.

I thought each presenter was well versed in the subject and made great points. My position on bid managers is that in order for them to be effective, they need to be designed to generate as much profit as possible. Bid managers that exist today are mostly focused on CPA and only looking at the last click.

The problem with focusing on a CPA is that the bid manager will reduce the price after a certain number of clicks and no sale has occurred. At the end of the day, you may achieve your desired CPA, but you may be disappointed to find that you did not achieve your desired number of conversions and profit.

We at ClearSaleing know that our clients on average receive anywhere from 20-50+ percent of their sales from more than one ad click. Therefore, if the ABM is only focused on the final ad, it is setting bid prices inaccurately 20-50+ percent of the time.

This entry was posted on Monday, December 22nd, 2008 at 9:48 am and is filed under All Blogs, News, Uncategorized, What's New?. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.