Keyword Bidding

Attracting online shoppers is most often a matter of your website showing up on search engine result pages. Keyword bidding is the process by which advertisers compete for top positions on these pages.

When online shoppers search for products or services, two sets of results are typically shown on the results page. One is the organic listings of web pages that are sorted according to relevancy and other search engine optimization factors. The other results are paid ads. These paid ads are also listed in order but based on the process of keyword bidding.

Advertisers choose keywords or key phrases that are targeted to a specific product or service web page, and bid against other advertisers who want the same keywords and phrases. Whoever bids the most for any word or phrase shows up higher in the order of pages and lists of search results. So, the highest bidder will be placed on the first page at the top of the list of paid results.

So, how much should you bid on keywords?

The first thing is to decide what keywords and phrases are best suited for your website. Ideally, each web page on your website should target specific words and phrases. Keep in mind, Google ranks paid ads not only on bid price, but also based on Quality Score. If you bid on unrelated keywords, you will get a lousy Quality Score and be charged much more per click.

There are keyword tools available like Ad Word Analyzer that allow you to search for different words and phrases and quickly determine how popular they are among both searchers and advertisers. Ad Word Analyzer lists keyword bid prices, so you can easily see what your competitors are paying for keywords you want to bid on.

Once you have your keyword list, you need to determine how much you are willing to bid for any specific word or phrase. In order to do that, you should answer these two questions…

1. How much profit will you make for each sale?

1. How many visitors will it take before a sale occurs?

For example, if you make $100 profit for each sale and your websites conversion rate is usually around 2 percent (eg. 2 out of every 100 people who visit place an order), you can bid $1 a click and still double your money.

Always consider the amount of profit from each conversion (sale) online when calculating your bid. Higher profits can compensate for low conversion rates. Likewise, products that convert at a higher percentage, but generate lower profits may not be worth the highest bids. Sometimes a lower bid, even if it means your ad isn't on the first page, produces the best ROI.

You should use Google Analytics to maximize your keyword bidding. With Google Analytics, you can study in detail every aspect of your ad campaign and test different approaches until you find what works. Always remove keywords that don't generate any sales.

If you apply these simple tips, you will have much greater success with your keyword bidding.