How Much Should You Bid?
When setting your max bid price on ad networks like Google AdWords, Yahoo! Search Marketing or Microsoft AdCenter, it's best to know how much you're getting in return (profit) before you settle on a number. If you bid too high, you might get more sales but still be in the red. If you bid too low, you might make an okay profit but less conversions. The trick is to find just the right number and that takes time and finesse but here's a quick way to determine what your max bid should be.
In general, the formula I use for determining max bid is basically this:
((ecpc * (1 - bounce rate)) - 0.01)
So if your ecpc is $0.75 and your bounce rate is 40%, that means you really generate $0.45 ecpc. Subtract $0.01 from that ($0.44 ecpc) and you'll have a very safe maximum to set your keyword bids at.
Just so everything is clear for you, here are some definitions for the above terms:
ECPC (Estimated Cost Per Click) - This is the estimated dollar amount you receive per click. Essentially, it's [Revenue] / [Clicks]. Although it can seem tempting to just use this number when determining your max spend, it's dangerous as this number can often be wrong due to a high bounce rate.
Bounce Rate - Put simply, this is how many people visit your landing page but don't click on your affiliate links. In general, this probably doesn't apply to forwarded links or framed pages but it's still good to figure out. To figure out what your bounce rate is for a given landing page, just look at how many clicks you've paid for vs. how many your ad network (Azoogle, Neverblue, Copeac, etc.) tells you you've received. For example, if you're using AdWords and Azoogle together, AdWords might tell you you've paid for 100 clicks while Azoogle will tell you it's registered 60. If this is the case, your bounce rate would be 40%.
Of course, this isn't the only method to use when setting bid prices but it's what I use in general. I hope it helps.
Scott
Maximum Bid Calculator
eCPC:
Bounce Rate:
Max Bid: $0.00
Bounce Rate Calculator
PPC Clicks: (how many clicks you paid for)
Network Clicks: (how many clicks Azoogle, Neverblue, CJ, etc. show)
Bounce Rate: 0%
Popularity: 58% [?]
February 11th, 2008 at 8:00 pm
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February 12th, 2008 at 7:33 pm
When you say ECPC I think you really mean EPC (earnings per click). Pretty cool tool though, thanks.
February 12th, 2008 at 10:10 pm
@Ben: I’m referring to the acronym that networks like Azoogle use when talking about earnings per click. Now that you mention it, it actually stands for Effective Cost Per Click, not Estimated Cost Per Click. In the end, it is the amount the network figures you get paid per click.
September 10th, 2008 at 5:01 am
[...] a problem. You should track the overall ROI of your campaign and you can read more about that here (The Affiliate Toolbox Blog Archive How Much Should You Bid?). Q. Do I have To Send In My W9 To Be Paid By Azoogle? A. Yes. Q. Why Haven’t I Received My [...]