bidding models complex & simple by sandeep dey
TRANSCRIPT
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#SMX #11B @sdey
Optimizing Bidding for different Scenarios
Bidding Models Complex
& Simple
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#SMX #11B @sdey
Developing a Bidding Strategy
Whatdoyouwanttodo?
1. BrandedvsTransactional2. ReachvsEfficiency3. CPAvsCPC
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#SMX #11B @sdey
Target: Maximize Volume
• ConcentrateonkeywordswhichhavelowCPCbuthighvolume
• Querieswithlowertransactionintente.g.Facebookcansustainhugetrafficevenat0.01$
• Biddingbecomeslessimportantinsuchascenario,budgetmaintenancebecomesmoreimportant
• BidtogetTopofPage
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#SMX #11B @sdey
Target : Get revenue & new customers from spend
• Setupefficiencytargets&budgets• Gofortransactionalkeywords• Couldbelowervolume• Minetailkeywords
• Biddingisthemostimportantpartofthisstrategy
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#SMX #11B @sdey
Theory of Bidding, Cost, Revenue & Efficiency
Bidding Theory
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#SMX #11B @sdey
• Clicksincreaseasbidincreases(linear)
• Revenueincreasesasbidincreases(linear)
• Costincreasesasbidincreases(quadratic)
• Efficiencyincreasesasbidincreases(linear)
How does efficiency change with bids
bid
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#SMX #11B @sdey
• Maximizevolumewhilehittingefficiencytargets
• Profitisnotthemetricweareoptimizingfor
Aim of the game : Hit target efficiency
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#SMX #11B @sdey
• PLA• Revenuefollowsalogitfunction
• EGRfollowsacrazyslope
• BroadMatchKeywords• Costfollowsanexponentialtrend
withbidincrease• Revenuefollowsalogtrendwithbid
increase
Not all keywords or programs are created equal
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#SMX #11B @sdey
Implementing Basic Bidding into an account
The Basics
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#SMX #11B @sdey
Revenueperclickx
Efficiencytarget
OR
RevenueperclickROAStarget
Bid Calculation Basics for a Keyword
Measures• Revenuelast30days
• Clickslast30days
Parameters• Efficiencytarget(EGR)• cost/revenue
• ROAStarget• revenue/cost
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#SMX #11B @sdey
• Differentproductssellatdifferenttimes.
• Useexponentialdecayonrevenueandclicks.
• RevenuefromNdaysagohasdecay^Nweight
• Startwith0.95decayfactor
Seasonality : Use exponential decay
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#SMX #11B @sdey
• Downjackets&sweaterssellthemostfromNovtoJan
• ThesalesvolumedecreasesbyhalfattheendofFeb
• Withoutadecay,thebidswillfollowseasonaltrendsveryslowly
Seasonality : Use exponential decay
YEAR
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#SMX #11B @sdey
• Differencebetweenbid(maxcpc)&cost(avgcpc)
• Bidshavetobeincrementedbyabidheadroomfactortopreventhyperefficiency
• Bidheadroom=maxcpc/avgcpc
Bid headroom
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#SMX #11B @sdey
• Sayyouwanttopay$.90/click• Bidupat1.10$
• Bidupby20%
(maxcpcxclicks/cost)
Bid headroom
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#SMX #11B @sdey
• ChooseatimeperiodtocollectRevenue&Clicks(30days)
• Keywordswithclicks>threshold(100clicks)canbebidwithindividualinfo
• Bid=revenue/clicksxefficiencytargetxbidheadroom
High traffic keywords
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#SMX #11B @sdey
• Groupmultiplekeywordstogetenoughclicksaboveathreshold
• Groupingcanbebasedonadgroup&campaigns
• Groupingcanbealsobasedoncategoryofthekeywords.
Low traffic keywords : Grouping keywords
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#SMX #11B @sdey
Low traffic keywords : Grouping keywords
• E.g.groupelectronicsintoasinglecategory
• GroupApparelsintoasinglecategoryifneeded
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#SMX #11B @sdey
• Increasedaterangeforlowtraffickeywords• Lessfrequentkeywords:longertimeranges• Bewaretoolongtimerangescan’tfollowseasonality
Low traffic keywords : Increase date ranges
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#SMX #11B @sdey
Issues to keep in mind while implementing a bidding strategy
The Troublemakers
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#SMX #11B @sdey
• Keepalookoutforbadsearchqueries&keywords
• Iftheyhavelowerbids,theywillreducebidsforthegrouptheyareclusteredin
• Solution:Negativekeywordthemorbeaggressiveintheirbidreduction
Keywords which don’t convert
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#SMX #11B @sdey
• Additionofbidmodifierswouldupsetyourbidding
• Anegativebidmodifiertendstomakeyouhyper-efficient
• FinalCPCarenotequaltowhatiscalculated
• Solution:measuretheoveralleffectofbidmodifiersonCPCandadjust
Bid Modifiers
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#SMX #11B @sdey
• Remarketinglistsforsearchads(RLSA)• +100%increaseforprevious
visitors
• Bidissetat1$,butCPC>1$• Solution:Figureouthow
audiencesaffecttheCPCintotal
Bid Modifiers
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#SMX #11B @sdey
Machine Learned Models for Bidding for an ecommerce
Advanced Bidding
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#SMX #11B @sdey
• TransactionalTextAdsBidding
• CampaignStrategycenteredoneitherlandingonProductPageorSearchPage
• ModeledintoaMachineLearningProblemwithtargetsasrevenueperclick
Advanced Bidding for Ecommerce
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#SMX #11B @sdey
Targetfeature:FutureRevenuePerClick
InputFeatures:• HistoricalRevenuePerClick
• Margin&Price
• Discounts
• Matchtype
• KeywordRelevancetoProductTitle
Performance:• Revenueliftof+20%withcostincreaseof+10%ascomparedtobaseline
Predictive Modeling at a keyword level
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#SMX #11B @sdey
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