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Beware of PPC bidding wars

Posted by Michael Bloch in web marketing (Thursday December 4, 2008 )

With the holiday shopping season in full swing, pay per click (PPC) advertising is picking up and the competition is feverish, with bidding wars breaking out all over the place.

I’m watching an interesting situation in an industry sector at the moment whereby a company with oodles of cash is spending up big on keywords that do not really relate to their own product. They are basically trying to convert people from a particular type of product to another totally different one, and really it’s a group that by and large doesn’t want anything to do with it.

The problem is, they are pushing bids up to maintain no. 1 spots. The effect that it is having is to encourage *relevant* advertisers upwards in their bids to trump them, the irrelevant company with bundles of cash then pays even more, and so on and so on; this has an effect all the way down the line increasing the costs for all.

It’s a bonanza for the PPC company, but certainly not for the advertisers – or searchers really.

If the other merchants just sat back and let Moron Money Bags bid high with a crappy irrelevant ad without trying to compete, all would be well. While quality scoring can lift the click prices substantially on rather irrelevant ads, when you have a company that has millions in their kit to throw at advertising and are desperate, a few extra bucks a click is chump change.

In cases like this I certainly advise people not to play the bidding war game if at all possible; particularly if margins are slim and I suggest if it’s a bad case of irrelevancy, to contact the search engine and point out why.

Reporting this kind of thing is not sour grapes, it’s about providing users with relevant advertising and having a more level playing field for all.

Pick up some more tips on minimizing PPC costs.


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