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Bidding Models Complex & Simple By Sandeep Dey
The document discusses strategies for optimizing bidding in ecommerce, emphasizing the importance of selecting appropriate keywords and managing budgets to maximize volume and achieve efficiency targets. It covers various bidding models, the impact of seasonality through exponential decay, and the need for careful analysis of keyword performance and bid adjustments. Advanced techniques, including machine learning models, are also outlined for predicting revenue per click and improving bidding strategies.
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Bidding Models Complex & Simple By Sandeep Dey
- 1. #SMX #11B @sdey OptimizingBidding for different Scenarios Bidding Models Complex & Simple
- 2. #SMX #11B @sdey Developinga Bidding Strategy What do you want to do ? 1. Branded vs Transactional 2. Reach vs Efficiency 3. CPA vs CPC
- 3. #SMX #11B @sdey Target:Maximize Volume • Concentrate on keywords which have low CPC but high volume • Queries with lower transaction intent e.g. Facebook can sustain huge traffic even at 0.01$ • Bidding becomes less important in such a scenario, budget maintenance becomes more important • Bid to get Top of Page
- 4. #SMX #11B @sdey Target: Get revenue & new customers from spend • Set up efficiency targets & budgets • Go for transactional keywords • Could be lower volume • Mine tail keywords • Bidding is the most important part of this strategy
- 5. #SMX #11B @sdey Theoryof Bidding, Cost, Revenue & Efficiency Bidding Theory
- 6. #SMX #11B @sdey • Clicks increase as bid increases (linear) • Revenue increases as bid increases (linear) • Cost increases as bid increases (quadratic) • Efficiency increases as bid increases (linear) How does efficiency change with bids bid
- 7. #SMX #11B @sdey • Maximize volume while hitting efficiency targets • Profit is not the metric we are optimizing for Aim of the game : Hit target efficiency
- 8. #SMX #11B @sdey • PLA • Revenue follows a logit function • EGR follows a crazy slope • Broad Match Keywords • Cost follows an exponential trend with bid increase • Revenue follows a log trend with bid increase Not all keywords or programs are created equal
- 9. #SMX #11B @sdey ImplementingBasic Bidding into an account The Basics
- 10. #SMX #11B @sdey Revenue per click x Efficiency target OR Revenue per click ROAS target BidCalculation Basics for a Keyword Measures • Revenue last 30 days • Clicks last 30 days Parameters • Efficiency target (EGR) • cost / revenue • ROAS target • revenue / cost
- 11. #SMX #11B @sdey • Different products sell at different times. • Use exponential decay on revenue and clicks. • Revenue from N days ago has decay ^ N weight • Start with 0.95 decay factor Seasonality : Use exponential decay
- 12. #SMX #11B @sdey • Down jackets & sweaters sell the most from Nov to Jan • The sales volume decreases by half at the end of Feb • Without a decay , the bids will follow seasonal trends very slowly Seasonality : Use exponential decay YEAR
- 13. #SMX #11B @sdey • Difference between bid (max cpc) & cost (avg cpc) • Bids have to be incremented by a bid headroom factor to prevent hyper efficiency • Bid headroom = max cpc/ avg cpc Bid headroom
- 14. #SMX #11B @sdey • Say you want to pay $.90/click • Bid up at 1.10$ • Bid up by 20% ( max cpc x clicks / cost ) Bid headroom
- 15. #SMX #11B @sdey • Choose a time period to collect Revenue & Clicks (30 days) • Keywords with clicks > threshold (100 clicks) can be bid with individual info • Bid = revenue/clicks x efficiency target x bid headroom High traffic keywords
- 16. #SMX #11B @sdey • Group multiple keywords to get enough clicks above a threshold • Grouping can be based on adgroup & campaigns • Grouping can be also based on category of the keywords. Low traffic keywords : Grouping keywords
- 17. #SMX #11B @sdey Lowtraffic keywords : Grouping keywords • E.g. group electronics into a single category • Group Apparels into a single category if needed
- 18. #SMX #11B @sdey • Increase date range for low traffic keywords • Less frequent keywords : longer time ranges • Beware too long time ranges can’t follow seasonality Low traffic keywords : Increase date ranges
- 19. #SMX #11B @sdey Issuesto keep in mind while implementing a bidding strategy The Troublemakers
- 20. #SMX #11B @sdey • Keep a lookout for bad search queries & keywords • If they have lower bids, they will reduce bids for the group they are clustered in • Solution : Negative keyword them or be aggressive in their bid reduction Keywords which don’t convert
- 21. #SMX #11B @sdey • Addition of bid modifiers would upset your bidding • A negative bid modifier tends to make you hyper-efficient • Final CPC are not equal to what is calculated • Solution: measure the overall effect of bid modifiers on CPC and adjust Bid Modifiers
- 22. #SMX #11B @sdey • Remarketing lists for search ads (RLSA) • +100% increase for previous visitors • Bid is set at 1$ , but CPC >1$ • Solution : Figure out how audiences affect the CPC in total Bid Modifiers
- 23. #SMX #11B @sdey MachineLearned Models for Bidding for an ecommerce Advanced Bidding
- 24. #SMX #11B @sdey • Transactional Text Ads Bidding • Campaign Strategy centered on either landing on Product Page or Search Page • Modeled into a Machine Learning Problem with targets as revenue per click Advanced Bidding for Ecommerce
- 25. #SMX #11B @sdey Target feature : Future Revenue Per Click Input Features : • Historical Revenue Per Click • Margin & Price • Discounts • Matchtype • Keyword Relevance to Product Title Performance : • Revenue lift of +20% with cost increase of +10% as compared to baseline Predictive Modeling at a keyword level
- 26. #SMX #11B @sdey LEARNMORE: UPCOMING @SMX EVENTS THANK YOU! SEE YOU AT THE NEXT #SMX