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IT Management : Columns : Executive Tech: Can You Bid on Ads Without Bid Management?

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Can You Bid on Ads Without Bid Management?
August 10, 2004
By Brian Livingston

Brian Livingston SAN JOSE — The Web e-conomy is heating up. There now are plenty of people, just as there were during the Internet bubble of the '90s, who'd like to help you spend your company's money buying online advertising to make your business grow, Grow, GROW! But do you need them more than they need you?

Signs of economic exuberance practically hit me over the head here at the Search Engine Strategies Conference (SES). The August 2-5 show brought together buyers and sellers of advertising in venues such as Google, Yahoo! and MSN. While big PC exhibitions such as Comdex and CeBit America are announcing their hibernations, attendance at SES is booming. (SES is sponsored by Jupiter Events, a subsidiary of Jupitermedia, the publisher of this Web site.)

More than 1,000 people — a 50% increase over last year's event — paid hundreds of dollars each to attend SES in San Jose this month. Some workshop ballrooms were packed with hundreds of rapt listeners. Each attendee came seeking a No. 1 ranking for their company in both the "editorial" search-engine listings, which are free, and the separate category of pay-per-click (PPC) text ads, for which advertisers must bid.

How many do you think will succeed?

Gentlemen, Start Your Engines

To be sure, practically any search you do at Google and elsewhere shows that someone does show up in high positions in both the editorial and the PPC listings. So, heck, it might as well be you.

Three bid-management services stood out at SES as metaphorical brain surgeons who've figured out how to help your company make the cut. These specialists can't do much about your editorial listings — that's the domain of a distinct field called "search-engine optimization" — but instead are primarily intended to maximize the results from your online ad spending:

Atlas OnePoint is notable for its self-serve approach to buying search-engine advertising. "People come to our site, put in their credit card, and they can start using our services immediately," says the company's president, Dave Carlson.

If your company is already running text ads in Google, Overture, or other PPC programs, OnePoint's computers suck your existing bids into a unified, Web-based interface. You then confirm your bids (or establish your bids for the first time) in a module called BidManager, track the return on your investment in ProfitBuilder, and finally let the software start jacking your bids up or down by itself via CampaignOptimizer.

The optimizer needs to "watch" the performance of your ads at varying bid levels for 30 days, Carlson explains. After that, you can let the program follow its own bidding strategy. "The first month, you need to look at it every day," Carlson says, "the next month, every week, and then you can go into it less often — but you still need to look at it."

As a self-serve program, OnePoint can be the least expensive of the three big-management services. Bidding on 50 search terms in up to 10 search engines can cost as little as $79.95 per month. (CampaignOptimizer is a separate service at additional cost.) OnePoint, however, scales up to meet the needs of clients who literally spend more than a million dollars each month on PPC advertising, according to Carlson. handles your search-engine advertising using the opposite of the self-serve approach. Did-it is more like a traditional ad agency, charging its clients a retainer of $1,000 a month plus 15% of the client's online ad budget.

In return, Did-it's clients are assigned a live account representative who scrutinizes each business and proposes a tailored advertising strategy.

Did-it pioneered the principle of moving a company's advertising bids up and down at different times of the 24-hour day. It's often true, Did-it found, that Web surfers order fewer products online between, say, midnight and 6 a.m. Lower bids may make more sense during those hours to avoid generating a lot of ad click-throughs that may never result in a sale.

This principle is now known as "dayparting." It's become a feature of several other bid-management services in addition to Did-it's. To differentiate itself, Did-it is now launching new tools, according to president Kevin Lee. One of these is a "geo-concatenator," which automatically generates popular locations and related terms to advertise on, such as "Las Vegas hotels," "Miami hotels," and so forth.

Did-it has clients who advertise as little as $5,000 per month, although most have a much higher budget, Lee says. His company also offers a lower cost-per-click rate, rather than a flat 15%, to ad agencies and search-engine optimization firms that support several online advertisers.

Inceptor is a more recent entrant to the bid-management field that also uses an ad-agency model. Rather than charge a retainer plus a percentage of "ad spend," Inceptor uses a formula based on the extensiveness of each client's bidding needs, says Michael Sack, the company's EVP and CTO. This translates into a monthly fee as low as $2,000, although most clients budget far more, Sack says.

Inceptor's computerized bidding methods are based on Wall Street portfolio-management strategies. The search terms your company bids on are organized into "portfolios" that can be configured globally, without having to tweak each individual bid. Inceptor adjusts your bids on each term based on your goals. These may be increasing your revenue, lowering your cost per new customer, or maximizing the return on your advertising dollar.

Use a Hired Gun or Do It Yourself?

Choosing one of the above services is a matter of setting your company's priorities. A small firm that needs to advertise only a single product might well find that a do-it-yourself approach, such as OnePoint's, is perfectly adequate. If your company sells several different products or services, however, the complexity of today's search-engine advertising quickly rules out a purely manual approach to bid management and demands automation.

Danny Sullivan, the editor of and moderator of SES, cautions newbies that "it's more important that you're using a conversion tracking tool than a bid-management service." Tools such as Conversion Ruler allow you to determine down to the penny how much visitors to your site are spending, what percentage of them request a free estimate, or whatever it is that you consider a "conversion."

"Once I know how much I'm willing to pay [to acquire a new customer], I can take the whole gamut of terms and bid 60 cents or whatever on all of them," Sullivan says. Bidding on PPC advertising without knowing whether you can make a profit from the visitors you attract is flying blind.


PPC advertising is already an important form of marketing for hundreds of thousands of businesses worldwide. If your company sells something on the Web, you're leaving money on the table if you're not maximizing your traffic in some way, ranging from the simplest labor-intensive methods to the most sophisticated, automated technology.

Brian Livingston is the editor of and the co-author of Windows Vista Secrets and 10 other books. Send story ideas to him via his contact page. To subscribe free and receive Executive Tech via e-mail, visit our signup page.

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