Debate: Is Bid Management Dead?

Jun 5, 2007 - 12:44 pm 0 by

Moderator: Jeffrey K. Rohrs, VP, Agency & Search Marketing, ExactTarget

Speakers: Robert Ashby, Microsoft (formerly Director of Search @ Expedia) Peter Hershberg, Managing Partner, Reprise Media Misty Locke, President & Co-Founder, Range Online Media Chris Zaharias, Senior Vice President, Strategic Initiatives Efficient Frontier

Debate: Is Bid Management Dead? at SMX Seattle

Forgive me as this is the first time we've ever done debate coverage. It was tough. :)

Jeff introduces the session as a formal debate. He introduces the panelists and then explains that Misty and Peter think that bid management is dead, and that Chris and Robert think that bid management is not dead.

Then he polls the audience and most people here think that bid management is not dead.

Misty speaks first. She says that her theory is that bid management is not dead but that a "one size fits all" no longer works. She is challenging how we view search marketing - so that we don't optimize ourselves into a corner. You can't focus solely on bid management solution. Search engines are no longer "bid to position." It is limited by time and data. Limited data will never understand CTR variables, impact of promotions impact of campaigns, conversion rate factors, etc.

Search is not just about keywords. There are other things that go into marketing: social marketing, video, branding, personalization, Google Base, etc. This is not present in a bid management tool.

If you're looking at the "last click to conversion" then you're forgetting about all the other marketing that is involved.

Consumer intent: it can never be measured by a tool. Marketing is an art, not a science. It can never be measured by an exact formula.

64% of all searches happen in the same month and 4% happens immediately.

Robert will cross-examine her first.

Robert asks: How can you possibly expect humans to do things like manage a tail of keywords? Misty answers: I do not believe that these tools don't have a place in marketing. I just don't think they are the 'be all end all' solution. There are mini tools, one size does not fit all. Robert: If you can redefine what is the nonautomated automated solution, it would be fantastic. Misty: Am I conceding that the tools can help? Yes. But I don't think they are the best way to manage the campaign. Robert clarifies: There are open questions that there are influences - how would you characterize increasing clickthrough if they didn't have better SEO? Misty: Bid management tools don't always perform quickly enough. You cannot put a tool on your system and walk away and not look at it. It's not just the consumer's path; it's also the marketers' intent.

Chris gives the argument now on why bid management is not dead.

Chris explains the history of bid management because he says the context is important. In 2001 and 2002, a lot of people were taking advantage of search and people were buying a lot of keywords. Many people built Excel spreadsheets where all the data was stored to get rules to see which keywords should be bid more on which should be bid less on. This also took advantage of transparent marketplaces but Yahoo! Panama and Google replaced those markets.

However, bid management exists today and works well. The first proof that I have is in a data presentation (illustration shown of a graph). X axis: daily ad spend. Y axis: number of transactions/signups. You see an increase in signups as ad-spend increases.

My second point is that I would make a very strong case that advertisers don't have enough time to market. The reason for this is because they are doing things manually. They can't get to more important tasks because they are looking at math.

Another proof around bid management not being dead: There are at least a dozen firms that are selling bid management systems (aQuantive, Efficient Frontier, DoubleClick, Did-It, etc.). The fact that they are getting acquired by large sums means that there's something there.

Another one: there's a reason why Google is charging for its API: the reason is that people are using it. Every major search engine has an API. Those that don't have it are building it.

Automated campaign optimizaton does not apply to engines with opaque bid landscapes. The traditional approach does not work - data modeling is successful for keyword management.

To address the concern about data being invalid: many firms take historical data and compare it to more recent data, and it results in more accurate predictions.

Peter cross-examines Chris.

Peter: I'm glad that you went back to give a history with a respect to bid management. When there was complete transparency in the marketplace, the only way to secure a higher position was to bid more per click. Are there additional ways to do it today? Chris: Absolutely. You can buy keywords, etc. Advertisers and agencies don't have time to do that. Peter: Do you think that changing ad copy, landing pages, etc. can increase the cost? Chris: Absolutely. They can also decrease the cost. Peter: Is it true that the quality score creates a scenario where 2 advertisers are required to page different cost per clicks for the same keywords in the same placement? Chris: Yes. Peter: Let's assume that we're bidding on the same keywords but the engine requires us to pay 2 different prices. Don't I win because I am required to pay higher? Chris: In search management, you have to react to the entire portfolio of keywords of your competitors. Peter: I agree with that, but across a broad set of keywords, if a whole percentage of keywords were a high CPC, would you agree that regardless of how you are at bid management, there's no way to run an effective campaign? Chris: I would agree to the extent that the advertiser has the time and effort to do this thoroughly to improve their ad copy and landing pages.

Now there is a 4 minute rebuttal.

Peter: We've been asked to take a position about whether bid management was dead or not. I don't think anyone is that extreme. However, it's not synonymous with search engine marketing. In a way, if you bid, you can game the system. It's not about who is willing to pay the most but which ads are most relevant. There are a lot of factors: ad copy, landing page content, etc. I don't want to understand the importance of bid management, but it's really one variable in a much larger equation. Our sense was that bid management would become commoditized over time, and we've seen that happen. From our standpoint, successful search marketing includes relevent ads, good keywords, good copy, landing page content, things in the offline world, etc. Bid management is no longer synonymous with search marketing. Misty says that Peter's summary was brilliant.

Robert: There has been a time where advertisers have a challenge with 50,000 or 100,000 keywords. I have partners with 5 million keywords. People ask questions: what would I do as a marketer? I'd rather have a relationship with my clients. Customers come in and ask questions and look for answers. There are a number of different variables in the equation. The challenge is time. You're subsequently supposed to the best with what you're doing. I disagree fervently about bid management being dead. It's a foundation by which you can do other things. Bid management is something you don't want to spend time on, but you have to. If you don't look at it in a scalable way, it saps your resources. If you don't watch what you're doing, you'll blow your budget. Bid management allows you to focus your attention on those other metrics and to quickly react to other goals (profit, reach, etc.) But you think of "what is the bid that I'm trying to set towards?" However, you need to think at the variables too. Google, Yahoo, MSN, etc. employ a technology for you to facilitate your campaign so that you can focus on your customer and not the bid. Chris: Search marketing operates in search and content. Improved efficiency in taking the $500 billion+ cost of advertising and getting things in more advertising - radio ads, newspapers, etc. There is offline advertising. It is critical to have people capture data and analyze data to optimize their campaign. It's not a commodity because auctions will mediate offline advertising as well as online advertising. The role of bid managemnet is to do things efficiently so that advertisers can address other points that are more important.

Misty and Peter wrap up their argument.

Misty says that her points are great. She clarifies her statement: you do need tools to get the job done. It is not humanly impossible to not use tools, but it's more efficient to use them. Real search marketing do not look just at the immediate return. They look at a bigger picture. Technologies change, rules change, and there are offline factors. A keyword is just the same as a TV advertisement - but if you think of a bid tool management solution - that technology alone - is the end-all, then you'll limit your growth. Don't think of it just as a keyword and a bid. Peter: I made a reference to a quality score. There's no longer total transparency in the market. But it has also put the "M" back in SEM - where search engine marketing is about marketing again. At the end of the day, it's absolutely marketing, and I agree with Chris's point that we have to consider other advertising formats like other variables.


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