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Bidding management is absolutely necessary in any pay per click advertising campaign. The price you bid on keywords will determine the position you will get on the result pages of the search engines, and also it will determine the amount of clicks you get and the quality of those clicks. Bidding on the right keywords phrases could lead you to success, but if you choose the wrong ones you could be exposed to a loss.
Many people who start on the internet marketing business do not have a full understanding of bidding; they do not know how to calculate profitable bid amounts. The process is simple, but you must know the basic rules.

Pay per click bidding is the process of bidding on keywords to determine the placement of your ads on the result pages of search engines. The price varies depending on the popularity of the keyword. If you want to dominate this keyword phrase, you will have to bid very high.
The highest bidder gets to be on top of the search result listing. Every time a visitor clicks on you ad, you will have to pay the same amount that you bid on that particular keyword.
The way to start a pay per click bidding management campaign is to identify a set of keyword phrases that are relevant to your campaign and, at the same time, they are profitable. The price you pay for your keyword should give you the results you anticipated. You should know the maximum cost per click (CPC) that you can pay for them.
If you are going to use pay per click to promote an affiliate product, one simple way of managing your bidding is contacting the merchant to find out what the conversion rate is. If the conversion rate is, for example, 3% that means that, on average, it will take one hundred clicks to make three sales.
Let's say that you are running a campaign with a 3% conversion rate using a keyword which bidding price is $1.50. If your commission per sales is, let's say, $50.00, then you will make $150.00 for every hundred clicks on average. You can see in this example that if you pay $1.50 for that keyword, you can only break even. You must find a set of keywords with similar amount of searches but, less expensive. The best way of doing this is by searching for keyword using the broad parameter, targeting a large number of less popular keywords. This combine group of words can give you a considerable volume of traffic.
Another very important part of your bidding strategy is tracking. Tracking is a very useful tool for your campaign; this pinpoint which word phrase is profitable and which is not. Without tracking, you will not be able to measure the outcome of your campaign. There are many tools in the market that you can use to track your campaign. Google AdWords offers excellent free tools that will help you track your campaign's results. If you are starting now using pay per click in your advertising campaign, you probably will not need one of the many professional tools to manage your campaigns; at least not at the beginning.
Bidding management is the key to a successful pay per click campaign. By tracking your results you will be able to know how much you can afford per click by identifying those keywords that are profitable for your campaign.
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Pay per click (PPC) is an Internet advertising model used on search engines, advertising networks, and content websites, such as blogs, where advertisers only pay when a user actually clicks on an advertisement to visit the advertisers' website. With search engines, advertisers typically bid on keyword phrases relevant to their target market. When a user types a keyword query matching an advertiser's keyword list, or views a webpage with relevant content, the advertisements may be displayed. Such advertisements are called sponsored links or sponsored ads, and appear adjacent to or above the "natural" or organic results on search engine results pages, or anywhere a webmaster or blogger chooses on a content page. Content websites commonly charge a fixed price for a click rather than use a bidding mechanism.

Although many PPC providers exist, Google AdWords, Yahoo! Search Marketing, and Microsoft adCenter are the largest network operators as of 2007. Minimum prices per click, often referred to as costs per click (CPC), vary depending on the search engine and the level of competition for a particular phrase or keyword list—with some CPCs as low as US$0.01. Very popular search terms can cost much more on popular search engines. The PPC advertising model is open to abuse through click fraud, although Google and other search engines have implemented automated systems to guard against abusive clicks by competitors or corrupt webmasters.

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