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Ego Bidding Gone Wild

wright-tony
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Sometimes it’s good to get back to basics. I forget that not everyone lives, eats and breathes search like I do. With everyone this week talking about the changes at Google, who’s buying which ad serving company and what Bill Gates is going to do with the rest of his time at Microsoft, I want to talk about something very dangerous for the newbie search engine marketer. You seasoned veterans have probably witnessed the phenomenon I’m talking about more than you’d like to admit. That phenomenon is the ego bid.

The ego bid is exactly what it sounds like. I want to be ahead of my competitor no matter what the cost. In our society, we are taught that it is paramount to be number one. Most CEOs, CMOs, CIOs or others in charge don’t want to hear excuses from their agencies, partners or subordinates on why they can’t be number one in everything. They just want to be number one. Most of the folks in charge view life this way – be number one and if you can’t be number one, don’t play at all.

This kind of thinking works great on the football gridiron and in business in general, but when it comes to paid search, number one isn’t all that it’s cracked up to be.

Back in the "olden days" (a few months ago) when at least one of the major search engines utilized a straight auction model, ego bidders could have their way. They could bid to the top if they were willing to pay for the privilege. Now, in a world where relevancy criteria is in play, number 1 is somewhat nebulous. Personalization and behavioral targeting adds another layer of complexity to the mix. No one can just flip a switch and be number one in the search engines anymore. Sure, you can bid your way to the top, but if you don’t have the click-through rate and quality score, you won’t be number one for very long. And if you hit the refresh button a few times, you’ll find that you aren’t number one all the time.

Let me tell a story those who know me have probably heard at least three times. It’s about the time I convinced Yahoo to raise the limit on how much you could spend for one click.

I once had an ego-driven client. This client wanted to be number one so bad he didn’t care what it cost him. He had to beat his competition to show he was the best. He happened to be in probably the most competitive space in the PPC market, and his competitors were all ego-driven as well. At the time, Yahoo had a maximum bid of $100 per click in a straight auction format. This meant that you couldn’t bid more than $100 per click if you wanted to.

So, with five others bidding for $100 a click, the listings were ranked in order of who got their first. Unfortunately, my client came late to the party and was ranked number 5. This irked him to no end. He wanted to be number one – no matter that we told him it would just cost him more money and most likely wouldn’t bring in any more business. We lobbied Yahoo. We wrote posts on message boards about how the $100 limit was arbitrary and prevented the public from spending its money the way it wanted to.

Finally, the ban was lifted and the limit was raised to $10,000 per click. We immediately started outbidding the competition and the bills went through the roof – and surprise, no extra business. After enough money to positively inflate Yahoo’s stock price had been spent, we were no better off than the day we started the campaign at number five. In fact, we were worse off. Even the hardest-headed egomaniac will relent when he sees he’s going broke.

After much pleading, mashing of teeth and blame thrown all around, we convinced the client to let us bring the bid price down and implemented a day-parting strategy, with our goal to be in the top 3 positions during peak times. From an agency perspective, this was hard to do because we were getting paid a percentage of the media spend. From a moral, ethical and business standpoint it was the right thing to do because it was what the client needed. And if we hadn’t been able to get the client’s ego in check, they would have probably not been a client much longer anyway.

The moral of the story is that being number one is not the holy grail. Check your ego at the door when you entire into a PPC bidding interface. Look at your own statistics and see what is converting for you rather than spending all of your time worrying what your competitors are doing. I’ve seen too many clients fret over what their competitors are doing and not look at what’s working for them. If your competitor is spending twice as much as you, you don’t know if he’s making any more than you. You only control your own analytics. And remember, half of what is said by competitors at conferences, for example, is a lie. So don’t believe them if you see their tactics don’t work for you when you test them out.


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