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Balancing Impression share, rank and budget
When it comes to bidding on keywords, how do you know where you should be aiming to appear?
Should you be aiming to be position 1 all the time? Or should you bid for position 3 for some cheaper clicks which are still at the top of the page?
Personally I think it should be less about bidding to a position and more about bidding to get the most clicks for your budget.
Consider these two limitations and you should end up in the same place I did.
Bidding to the top of the page will always cost you more per click. That’s the way the bidding system works, even if some may tell you otherwise (LINK)
So why would you want to pay more than you need to for a click?
Lower positioned Ads get fewer clicks.
So why would you bid so little that you actually start to get reduce your clicks?
You end up thinking that you should somehow balance paying as little as possible with getting as many clicks as possible.
It's all about impression share
But how do you get the balance right? It’s all about impression share.
There is a column available in Adwords called “Impression share”. If you haven’t already added this, do it now!
This column will show the percentage of searches you are targeting that your ads show for. So if there are 100 searches over the course of a day and your advert shows for 60 you will have an impression share of 60%.
There are also two other columns which show what percentage of impression share you are losing due to budget and due to your ads rank. All together these three columns should add up to 100%.
The next step is trying to get impression share as close to 100% as possible with your current budget. And to do that you need to reduce how much impression share you are losing due to budget or rank.
Impression share lost due to rank
If you try to reduce impression share lost due to rank you will be paying more per click and therefore will be getting less clicks for your budget. Which is not our goal here.
Impression share lost due to budget
What we need to do is reduce impression share lost due to budget, which will mean paying less per click to allow for more clicks.
For example, you could spend £1 a click for position one where you have a Click Through Rate (CTR) of 10% so every 100 impressions you get 10 clicks and it costs £10.
But if your impression share is 50% then there is another 100 impressions you are not showing for at all.
If you lower your bid to 50p you might also drop to position 3 or lower and have a lower CTR too. Let’s say your CTR changes to 5% that means for 100 impressions you get 5 clicks and it costs you £2.50. there are 200 impressions available and since you haven’t met your budget you show for all 200 and get 10 clicks. Costing £5. Oh my that’s the same amount of clicks for half the price. Mind blown… or not?
This is a pretty blocky and extreme example, but it shows the theory.
Problem you might come across
You may find that when using this method you reduce bids, but before you see Impression share lost due to budget get to 0%, your number of clicks actually reduces as well. This is because your budget is not enough to show your adverts for 100% of the impressions.The bid price you had just before your number of clicks reduced is where you should stay, and then all you can do is increase the budget and you should see the 0% before long.
Once you reach this point, you know you are using your budget well. The only thing you can do to increase the number of clicks is to bid higher AND increase your budget accordingly.
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