How to calculate bid price for PPC

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sicnarf

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Hi everyone,

As a newbie, I'm having a hard time wrapping my head around how much to bid for keywords for PPC. I'm not even sure the numbers I provide will help any, but here goes. Let's say I have a $100 budget for PPC. The CPA offer pays $4.50 a lead. Can I determine roughly what my initial bid should be or is there not enough information.

Thanks in advance.
 
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You need to know the est. CPC for the keyword.
Nobody can tell you how much you need to bid.
Some niches have a much higher CPC as others.

For example finance niche and finger-painting niche.
 
It all depends on your competition and how much they're paying so that's not enough info. Frequently you have to bid high at the start to get some traffic and establish your CTR and then you can slash your bids later on.

Basically you have to either:
a) estimate your expected conversion ratio and then bid no greater than that would allow, eg. if you're expecting to convert 1:20 then you could bid no greater than 22c / click for a $4.50 offer. Always estimate conservatively.
b) you bid as high as required to get the top spot (or a spot in the top three) in order to get quick feedback as to what your bid costs and conversion ratios are going to be. You deliberately lose money to start with so that you can get quick data.

Frequently low paying CPA offers don't work that well for PPC because the traffic tends to be quite expensive. If you're Adwords and trying to run a CPA offer then your campaigns will get suspended after the first manual review.
 
This may help you out:
Code: 
http://www.scottboulch.com/max_cpc.html
 
Autumn said:
a) estimate your expected conversion ratio and then bid no greater than that would allow, eg. if you're expecting to convert 1:20 then you could bid no greater than 22c / click for a $4.50 offer. Always estimate conservatively.
Click to expand...

The follow up question is how do I estimate a conversion ratio? Thanks!
 
sicnarf said:
The follow up question is how do I estimate a conversion ratio? Thanks!
Click to expand...

That's where prior experience and data come into play. For quality PPC traffic then a 5% (1:20) conversion ratio is probably about average and it could be a lot lower if the traffic and / or offer are good. However if your targeting is a bit off or the offer sucks, your conversions could be a lot worse and you could hemorrhage money.

Since I assume it's an offer that you haven't promoted before and a traffic source you haven't used before, the only way to get some conversion data is to throw a bit of cash at the problem. Generally if you can break even on your first attempt with an offer then you are on to a winner, because after you have done some more tweaking you should be able to pull the campaign into profitability.

Another thing to consider is that what you bid isn't necessarily what you end up paying, depending on the PPC platform. For example on Adwords, you might have to bid $1 to get a particular spot, but then if your CTR and quality score are good then the amount you actually end up paying per click (vs your bid) will be much lower.
 
Last edited:
Autumn said:
That's where prior experience and data come into play. For quality PPC traffic then a 5% (1:20) conversion ratio is probably about average and it could be a lot lower if the traffic and / or offer are good. However if your targeting is a bit off or the offer sucks, your conversions could be a lot worse and you could hemorrhage money.

Since I assume it's an offer that you haven't promoted before and a traffic source you haven't used before, the only way to get some conversion data is to throw a bit of cash at the problem. Generally if you can break even on your first attempt with an offer then you are on to a winner, because after you have done some more tweaking you should be able to pull the campaign into profitability.

Another thing to consider is that what you bid isn't necessarily what you end up paying, depending on the PPC platform. For example on Adwords, you might have to bid $1 to get a particular spot, but then if your CTR and quality score are good then the amount you actually end up paying per click (vs your bid) will be much lower.
Click to expand...

Thanks so much for the information. I see that there are so many variables involved that the only way to get started is to put in some bids and closely monitor what is taking place so I can react appropriately. This is where the business savvy kicks in.
 
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