You’ve set-up your campaigns, organized your ad groups, selected your keywords and placements, and written great ad copy.  Now, how are you going to pay for all of the traffic your well-organized campaigns are expected to bring you?  Is paying for every click on your ads the most cost-effective bidding option for you?  Would your business benefit more from increased visibility than actual traffic to your website?  These are important questions to think about when you are getting ready to launch a paid search campaigns.  Below are a few guidelines to help you find some answers.

Bidding Options

  • Cost Per Click (CPC) Bidding:
    • CPC bidding is probably the most common bidding option used in paid search marketing.  Basically, you pay each time a visitor clicks on your ad – simple enough, right?  Simplicity is the one of the main reasons CPC bidding is so popular, as it is a very easy billing model to understand.  CPC bidding is optimal for advertisers whose main goal is get traffic to their site, with the end goal of driving that traffic to a converting action (purchase, sign-up, download, etc.).  In some paid search platforms, there are variations of CPC bidding.  For example, Google Adwords allows for "Automatic" or "Manual" CPC bidding, essentially giving you the option to either let Adwords adjust your keyword bids to bring you the most clicks within your budget, or control your own individual keyword bids.  When choosing CPC bidding for your paid search campaign(s), keep in mind that each keyword will have a different cost per click – the more competitive the keyword that you are bidding, the more you can expect to pay for that click.
  • Cost Per Impression (CPM) Bidding:
    • This bidding option allows you to pay each time your ad reaches 1,000 impressions.  This is a great bidding option for new businesses trying to gain visibility, or advertisers looking to increase brand awareness.  Although you are paying for people to view your ad, rather than to view your website, many advertisers opt for CPM bidding because you can easily predict your advertising costs.  CPM bidding is a good option for advertisers whose messaging can be conveyed in the ad itself, with a click through to their website just icing on the cake.
  • Cost Per Acquisition (CPA) Bidding:
    • Cost per acquisition bidding is a newer feature in Adwords that allows advertisers to determine how much they are willing to spend in order to get a conversion.  Although there are several requirements that Google asks advertisers to meet before they can use CPA bidding, the most important requirement will come from you – how much is an aquisition worth?  In cases where customers are making online purchases, that questions will be pretty easy.  However, it can become a little more tricky when we start to think about the value of a phone call, white paper download, or contact form completion.  CPA bidding is a good option for advertisers who don’t want to spend a ton of time manually adjusting keyword bids.  Instead, Google does the work for you, with the goal of finding the optimal bid for your ad each time it’s eligible to appear.  So far, many advertisers are reporting more conversions at lower CPAs using this bidding model.

Choosing the right bidding option for you really comes down to your individual business and online marketing strategy.  Experiment with different bidding options and see what works best – there really is no substitute for old fashioned trial and error!


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