Predictive modeling technology is used by some firms, including Efficient Frontier, as an optimization platform to boost paid search campaigns. This highly evolved approach can accurately predict the cost and volume yield of a particular bid position and also the conversion profile of a keyword. Successful operation within the opaque markets occupied by Google, Yahoo! and Microsoft requires an advertiser to accurately model the maximum CPC, the effective bid position, and the resulting revenues. This is extremely important at all times however in a recession, when every penny counts and nothing can be wasted, this approach becomes even more critical.
Typical rules-based methods are based on older technology and require a large amount of human management which both undermines productivity gains and introduces the potential for errors. Fundamentally, this approach will not calculate optimal bids on multiple positions across over 10,000 keywords.
A campaign consisting of two keywords that can be bid to 10 different positions would require 100 trials to find the optimal solution for those two keywords. Increase the portfolio to 10 keywords, and that number increases to 10 billion combinations. Even this limited campaign cannot be calculated effectively by individuals using Excel spreadsheets and applying rules to keywords. Once the three search engines are added, with the vagaries of keyword match types, content versus search and different syndication, the number of decisions required to figure out optimal positions is far beyond the scale of any rules-based technology.
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By Nick Morley
VP Sales, Europe
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