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Dealing with Overbidders on PPC Engines

Posted: November 2, 2005

Why People Over Bid on Pay Per Click Search Engines

It is common for a new company to enter the pay per click market and immediately assume they must be number one.

This assumption is often based around, if other people are bidding this high, then they must be making money, therefore I can bid this high and make money as well.

Other times, it is ego driven from the need to appear as the first listing.

Are they actually Over Bidding?
The first thing to remember is maybe they are not overbidding, but can actually
afford that bid. You know your industry better than anyone, so look at the numbers and their site - you might learn better ways to optimize your keywords, landing pages, and pay per click accounts.

Other times, they are just overbidding and there is nothing to gleam from them.

There are several ways to deal with over bidders.

Overture Pay Per Click Strategies

The first is to just ignore them. Place bids based on your ROI and maximize your account. If they are truly overbidding, then time will take a toll on their
account and their bids may go offline or later be reduced to a reasonable rate.

The second strategy is to price pin (gap jamming) their bids. Be careful with this technique as it can cost you as well. It is recommended to read the price pinning and the bidding strategy article before using this technique.

Until you use a bidding software for Overture that can monitor and change your bids on a regular basis, it is best not to attempt to price pin anyone, and just let your account run and ignore the other companies.

Once you have such a system in place and can update your bids often, then you can make attempts at price pinning someone. Be wary of how often they monitor and change their bids. Many people use automated systems, and you can time their
bid updates to know exactly when they are making changes to an account, so you can set your software to change your bids directly afterwords.

Google AdWords Strategies

While price pinning is easy on Overture since you can see the listed bids, it is much more difficult on Google AdWords as keyword prices are not listed.

Many times when someone thinks their is an over bidder on AdWords, it is not a high bid, but a very high CTR which is maintaining their position.

There are creative ways of analyzing the Bid Rank formula and plugging in speculative information to determine pay per click bids.

You can also raise your temporary bid to the max allowed by Google AdWords to see your estimated price. However, be careful with this as you do not want to actually pay out this amount. If the competition has set their bids at the max allowed, the CTR rate will determine who is in first place and will also charge the first place person significantly more than the second place bid (If that does not make sense to you, read the AdWords Bid Rank Formula article)

On AdWords, until you learn all the intricacies of the system and feel comfortable doing speculative math to determine bids, CTR rates, and position, it is recommended to optimize your account for what you can afford, and let them worry about their own budget.

It’s Your Pay Per Click Account that Matters

Over bidders can cause everyone a headache, but the bottom line is if YOU are making money, not if your competition is making or losing money. If you can maintain profitable pay per click accounts and a good position, then make the best account possible and let your competition spend time worrying what you are doing.

Lead the pack, do not follow it.

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