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Is There Any Reliable Way to Find the Bid Gap?

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# 1
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Has anyone devised a fairly reliable with to determine bid gaps?

 

Many agree position #1 performs the highest as far as CTR and Total Conversions. But this is disregarding Cost per Conversion (and to an extent, conversion percentage rate).

 

If say you have three competitors bidding on the same keyword (let's also assume Quality Score is the SAME for you and your competitors)

 

Competitor A Bid - $2.00
Competitor B Bid - $1.75
Competitor C Bid - $0.75

 

It is widely accepted that your conversion percentage rate is the lease effected by your ad position - it is mainly dependent on how well your ad is targeted and your 'offer'.

 

But in this case, which is probably not that uncommon, the cost per conversion is going to be much lower if you bid $0.80 instead of $2.10. Yes, you will probably get less conversions, but the savings in the lower cost/conversion could be re-allocated elsewhere for better ROI.

 

It seems to me there is a high chance in many cases you have more than one competitor that is striving to be #1. In fact it probably isn't uncommon for their to be an almost constant stream (in higher volume keyword categories) of relatively new competitors to the Adwords market that come in with less knowledge and go for #1 at almost any cost before learning their lessons.

 

With the bidders in the auction potentially changing or changing their bids as time goes on, you really can't rely on the bids to be stable for any length of time. This would tell me trying to look a small period over time with different average ad positions (by altering your bids during those periods) wouldn't be a very reliable way to find the gap. Sometimes it might work when there are few and consistent competitors I suppose.

Thoughts?

1 Expert replyverified_user

Re: Is There Any Reliable Way to Find the Bid Gap?

Top Contributor
# 2
Top Contributor
Hi Jeff
Great question. Unfortunately, there's no way that I'm aware of other than manual checking or using a third party optimization platform. I'm actually in the process of building something that monitors this and tries to "play the gap" but the closest thing you can do is really use a flexible bidding strategy for top of page. Unfortunately, that usually means the first position.

Alternatively, you may want to use a bid to position script like this: https://developers.google.com/adwords/scripts/docs/solutions/bid-to-position

and set it to position 2 or 3 and see how that goes.

Re: Is There Any Reliable Way to Find the Bid Gap?

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# 3
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Yes, I guess the answer is that it is very difficult.  You would need a significant amount of historical data which in most cases would take time to build up.  By the time you built it up, the gap may be closed by other advertisers joining the auction or exsiting ones changing their bids.

 

I suppose all you can do is make an imperical "educated guess" as to the highest ROI position based on collected data and just keep re-evaluating the data.  

 

Logic does dictate that the highes cost/conversion will be position one but also the highest number of conversions.  So it really boils down to what your break-even point is on your average profit per conversion minus the ad costs.  And obviously that is going to vary greatly depending on the product/service and the auction competition.