Posted by TastyPlacement
This post was originally in YouMoz, and was promoted to the main blog because it provides great value and interest to our community. The author's views are entirely his or her own and may not reflect the views of SEOmoz, Inc.
Are you competing in a high-stakes PPC market with bids in the $25 to $40 range? If you are, don't simply fight your competition head on; if you do, you'll end up paying premium prices for clicks you might capture for far less. There are several shrewd approaches you can employ to side-step your less-vigilant competitors. We've learned a few valuable tricks that can earn you valuable clicks for less-than-premium prices. The techniques begin with carefully monitoring PPC activity throughout the day to discover low-competition time slots in the PPC bidding and striking while your competition snoozes.
Getting Started
The types of campaigns for which these techniques will work will be high bid environments with smaller but determined competitors. You want to look for competitors bidding for terms in the $20-and-up range, but whose campaigns are not fully budgeted to run at the maximum number of available clicks. Specifically, we want to look for competitors' ads that don't appear consistently or whose ads disappear later in the day. Smaller competitors tend to fit this model fairly often. An illustrative keyword example we see in our local market of Austin Texas is "Personal Injury Lawyer". We know the bids in that space are $24 to $30 depending on the time of the day--but we see some advertisers drop out at various times of the day. For illustration, we'll examine Google's Adwords system, but these principles will apply to any PPC program.
Identify Your Competitor's Ad Schedule
Google's Adwords system has a scheduling feature that allows advertisers to run ads during particular times of the day, and even enter positive or negative bid adjustments based on times of the day.
Here's the catch: the Adwords system only allows the scheduling to be made in increments of 15 minutes, as shown in the screenshot below.
So, if your PPC competition is employing the ad scheduler, it become fairly easy to identify when they stop running ads by running test searches throughout the day at 15-minute intervals. Once you've identified a competitor using the ad scheduler, you've just found a soft spot--your bid competition will be lower during the times of the day when that competitor isn't bidding on ads. If you can identify more than one competitor, then you've found and even more favorable environment.
Identifying Competitors' Under-Budgeted Campaigns
There is another way to determine soft spots in PPC bidding: look for under-budgeted campaigns. You can identify your competition's under-budgeted campaigns fairly easily. An under-budgeted campaign is one where the advertisers daily budget will not supply the maximum number of clicks available to that advertiser. So, say a competitor is paying an average of $20 per click for a particular keyword; assume further that their daily budget is only $60--yet there are ten clicks available to that advertiser.
That advertiser has only budgeted enough to purchase three clicks, so Google is forced to economize ad delivery--and it gives advertisers only two choices: standard delivery and accelerated delivery.
Standard delivery means that Google will spread the ads throughout the day. In practice, Google might show an ad every third time a keyword is searched. Accelerated delivery means that Google will simply show an advertiser's ads every time they are triggered by a search query until the advertiser's daily budget is exhausted.
There lies the opportunity: if your competitor is employing the accelerated delivery method with an under-budgeted campaign, that means their ads will eventually stop running at some point during the day. You'll know that your competitors are employing accelerated ad delivery if their ads show consistently in the morning (in 99% of cases, advertisers set their time zone correctly so a Google Adwords "day" begins in the morning) but their ads disappear at random times in the afternoon from day to day.
Outsmarting the Under-Budgeted Competitor
So, how can you capitalize on a competitor that employs accelerated ad delivery? Say your competitor is fighting hard for position one for a particular query and will not yield on their bid price in order to stay on top (that's a fool's approach, as we'll see). You can force your competitor to exhaust their budget more quickly by simply raising your bid as high as you can without dislodging the competitor from position one. Google's bid price calculation system takes care of the rest: Google adjusts the actual cost-per-click to be based on the dollar amount needed to exceed the "next ranked ad." If the next ranked ad (you) has a higher bid then the ad that got the click (your aggressive-bidding competitor) costs more. Thus, you can knock your competitor out earlier in the day while at the same time increasing their cost-per-click. Be warned though, you will, of course, be raising your bid, so you could potentially wind up paying more for clicks you do get.
Now to Enjoy the Lighter Competition
With your competitor's budget exhausted in the later hours of the day, the competitive bidding for a particular keyword/keywords thins significantly. If circumstances line up properly, you can lower your bids in the afternoon hours and enjoy far less expensive clicks, and better click-through rates (and, ultimately, higher quality scores). There are two ways to approach lowering your bids in the later part of the day.
The first approach employs the advanced "bid adjustment" feature in the Adwords ad scheduler described above. To use the bid adjustment feature, log in to your Adwords account, click on a campaign, and then click the "Settings" tab. From there, scroll down to the Advanced Settings section and select "Schedule: Start date, end date, ad scheduling" and then click on "Edit" in the "Ad scheduling" subsection. This will reveal the ad schedule pop-up window (shown below). At the top of the pop-up window, you want to click "Bid adjustment" mode. You can then set specific time periods on specific days and apply a percentage multiplier to lower your bid. In the screenshot below, we've adjusted our campaign from 4pm to 7:30pm to adjust our bids to 72% of the standard bid. At all other times, our bid prices stay at the standard bid prices we've selected. There it is, we've just adjusted our bids downward to enjoy the lighter competitive market we've identified that takes place during later hours of the day.
There's a second approach to lowering bids later in the day that is a bit less elegant, but still effective. The second approach involves simply creating two ad campaigns: a first campaign scheduled to run during the earlier, more competitive hours of the day, and a second campaign with lower bid prices that is scheduled to run from say, 4:00 p.m. to 7:00 p.m. The advantage to this approach is that you'll have separate analytic data for the separate campaigns. We prefer this second technique for specifically this reason.
We hope you've learned a bit from this article. While a bit Machiavellian, the techniques we've outline can help in competitive markets, and certainly the lessons here can be transposed into your daily PPC activities.
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