What is the key difference between AdWords bidding and real time bidding

AdWords Bidding

Whether or not an AdWords advertiser should let Google handle the bidding of their keywords is a question that has been asked since the beginning of time. Or at least, since it became an option. As with most approaches to AdWords management, there’s no clear-cut right or wrong answer but that doesn’t mean there’s a shortage of opinion.

If you choose automatic bidding inside AdWords, you’ll set a max CPC on the campaign level. Doing this is simple, you just enter a number, but setting a max CPC for an entire campaign can hinder your performance. Using examples makes this easier to explain, so let’s say you’ve set your max CPC at $2 and you’re getting good conversions and clicks at position four on one of your keywords while paying an average of $1.93 per click. However, on another one of your keywords, you’re paying between $1.99-2.10 to average being at position eight and aren’t getting very many clicks. Let’s also say those are your top performing keywords conversion-wise, the rest of the terms in the group are getting clicks at under $2 but not resulting in many sales.

I want to focus on that keyword that’s ranked eighth, not getting many clicks, but has a high conversion rate. There’s a good chance that if you were able to boost the CPC for that term, you’d rank higher, get more clicks, and if the conversion rate holds, you’d be sitting pretty.

Therein lies my biggest problem with allowing Google to run bidding for you, any PPC expert will tell you that they adjust bids on the keyword level on a consistent basis, so it’s poor practice to set one common bid and let things fly. The alternative within Google-automated bidding is to forfeit a max CPC and let Google maximize your budget with the bids they think will get you the most clicks.

I can’t say one way or another that the second option is good or bad, all I know is that Google’s end-goal is to have you spend as much money as possible on advertising, that’s how they get paid after all.

How Does It Work?

When the script runs, it downloads the stats for today so far, and compares this to the stats it downloaded the last time it ran. From this, it deduces the performance for the most recent period (usually an hour).

(On keyword reports, you can’t segment position data by hour, so this is the only way to get up-to-date data about current average positions.)

The script only looks at desktop and tablet traffic, not mobile — the mobile landscape is very different because there are far fewer positions available. It also ignores Search Partners, as this can skew the data.

Then, if the average position is less than the target by more than 0.3, the bid is increased — the further the position is from the target, the more the bid is increased, by up to 20% of the original bid. Similarly, if the average position is over the target by more than 0.3, then the bid is decreased by up to 20%. You can see the formula in the image below (click to enlarge).

Bid Change equation

The script tries to avoid dropping the keyword off the page; if a bid starts above the estimated first page bid, it is not lowered beneath it. But if you think the estimated first page bids are too high for some of your keywords, there’s a variable called firstPageMaxBid that’s used to override it.

If the calculated bid is less than the firstPageMaxBid and the estimated first page bid, and the firstPageMaxBid is less than the estimated first page bid, the firstPageMaxBid will be used for the bid. If the estimated first page bid is less than the firstPageMaxBid, the estimated first page bid is used.

Also, you get a choice of what to do with keywords that haven’t had any impressions since the last time the script was run. If you’re worried about bids being too low, you can set the script to increase bids on impressionless keywords to the estimated first page bid (or firstPageMaxBid if the first page bid estimate is too high). If you don’t expect keywords to get traffic every hour or don’t want this, you can just ignore impressionless keywords.

How does the script know what the target positions should be? Keyword labels. This means that it’s easy to see what the target is when you’re working in your account, and it’s easy to change it by just changing the label.

Real Time Bidding

What is Real time bidding definition ?

Real time bidding (RTB) refers to the practice of buying and selling display ad impressions through ad exchanges in real time and one impression at a time.

Buyers – agencies, advertisers and some networks – are usually connected to the ad exchange by demand side platforms. The DSP automatically makes the decision to buy according to different parameters entered by the advertiser (price, target, ad unit, etc.).

 

Sellers – publishers and some networks – are usually connected to the ad exchange through a seller side platform (SSP) upon which they deliver ad impression inventories and set floor prices.

Real time bidding on ad exchanges was initially used for selling remnant, second tier inventories or small publishers’ inventories but RTB is expanding to all digital advertising domains (premium inventories, native advertising, etc.). Sometimes, real time bidding for premium inventory is done on private ad exchanges.

According to different studies, RTB was making up approximately between 30% and 40% of total display advertising by the end of 2015.

For the ad market, real time bidding is a way to reach market balance and to reduce costs and processing times. Through algorithms used on DSPs and ad exchanges, it is also considered by buyers as a way to optimize campaign effectiveness.

It may be noted that, if RTB refers commonly to display advertising trading, the first use of RTB has been made on PPC search engine platforms. And soon RTB will be used for TV with programmatic TV.

See below some visual and video explanations of real time bidding:

An example from Google:

A display platform that’s like search

If you want to increase brand exposure and improve traffic then Real Time Bidding (RTB) is a great option. Comparable to search, this display platform also benefits from advertising that can be tailored at user level. The longer a campaign runs, the more performance you’ll achieve.

Real Time Bidding

How RTB works

As the name suggests, Real Time Bidding is an auction process. When a placement becomes available for auction, we instantly place a bid on it for you.

The moment someone visits a webpage, the exchange announces to the bid manager of the available impression. The bid manager then takes into consideration what the advertiser is interested in, and whether there’s a match to the bid that the advertiser is willing to pay for the placement and/or audience. The winning exchange then serves the ad to the audience. The whole process is complete in 100ms.

Targeting and Inventory

We are able to fine tune your campaign using true conversion data in real time by targeting users based on key indicators of interest. How user interest is targeted is the key to a successful RTB platform and where we focus our efforts.

An RTB campaign also gives you access to display your ad inventory across ad exchanges that comprise some 800 million plus unique URLs. We maximise your campaign’s performance by using data to target the relevant audience and placements while utilising real-time bid optimisation. If you’re looking to increase reach and volume using high quality display exchanges then this style of campaign is for you.

If this sounds complicated then get in touch and we’ll be happy to explain in more detail.

RTB with nternet Marketing Team

Internet Marketing Team can build and run your RTB display campaigns with particular focus on the following:

  • Real-time targeting of the right customers for your business by serving ads to the best audience available via demographics, behaviour, geographic location, and user interest.
  • Identifying the most appropriate and relevant placements for your brand and filtering various types of websites for safety.
  • Transparent reporting of where and how your ads are running, how each ad is performing, and the associated media and data purchase costs.
  • Managing your creative through a single platform giving us added flexibility with your budgets and allowing optimisation across a huge inventory range. RTB bidding gives us results which help to maximise your budget based on performance.
  • Video, rich media and standard display ads all fully supported.

Bhardwaj Brothers
Founder
Hey Readers, Welcome to my blog ByNext. I'm Akash Bhardwaj, a professional-blogger from New Delhi, India.

I started ByNext as a passion and now it's empowering more than 500,00+ readers globally and helping them to make money with their blog.

Here at ByNext I write about Starting & managing a blog, WordPress, Social-media, SEO and Making Money online.

Leave a Reply

Your email address will not be published. Required fields are marked *