<< by on October 3rd, 2012
Robert Cooley, CTO of OptiMine Software – Bid Testing
Bid testing can be risky! Pushing bids up to achieve the top stop can result in huge cost with few gains. But despite the risks, Robert Cooley thinks it is still a good idea. Bid testing helps you identify changes in competitor and customer behavior. And advertisers that don’t bid test become less competitive over time.
Some considerations when bid testing:
- What is your business goal?
- Are you controlling for other variables such as seasonality or sales? It’s more effective to have limited ongoing testing throughout the year, regardless of external factors than to try and isolate one variable to test.
- What is the right testing methodology? The following are 3 bid testing strategies:
Current bid testing –
- Your baseline is the current bid
- Simple easy to execute
- Minimum financial risk
- Can be slow depending on the distance between current and optimal bids
- Low risk=low return (financial and insights)
Position based bid testing –
- Bid to achieve a specific position and observe the changes
- Easy to execute
- High risk of financial losses
- Common example: Google first page bid estimates
Value based bid testing –
This is the most efficient method of finding max value of a keyword. The keyword average value is the starting point. If a keyword receives 100 clicks and returns $100 in value, the average value per click is $1. This method quickly gets the bid into a “reasonable range.”
So as a brief overview, ongoing testing is important. Perform it early and often, making small changes to minimize risk and you will see continuous improvement. And make sure to track bid testing results separately from non-test performance. You need to be able to answer “how much is bid testing costing me?”