SMX: Is Bid Management Dead?

The second day of SMX 2007 begins on a more serious not, a debate on “Is Bid Management Dead?”. Jeffrey K. Rohrs, VP, Agency & Search Marketing, ExactTarget on Moderator’s duties starts off the subject with panelists Robert Ashby, Microsoft (formerly Director of Search @ Expedia); Peter Hershberg, Managing Partner, Reprise Media; Misty Locke, President & Co-Founder, Range Online Media and Chris Zaharias, Senior Vice President, Strategic Initiatives Efficient Frontier.

The panelists were already divided in two teams before the actual debate began with Peter Hershberg and Misty Locke who affirm the death of Bid Management while Robert Ashby and Chris Zaharias feel the opposite.

First on stage is Misty Locke whose perspective is that bid management is still around but disagrees vehemently with the idea of just one set of tool that eases all your marketing issues. As bid management is bound by limited data which cannot be the be-all and end-all that understands factors like CTR variables, impact of promotions impact of campaigns, conversion rate factors, etc. Finally, she adds more weightage in her stance by adding it takes more than keywords in search but other important deciding factors like personalization, social marketing, usage of video, brand of the product/service, Google Base, etc which are missing in bid management.

Three factors Misty cites for the death of bid management are:

1. The basic build and fundamental of a bid tool is lacking
2. It’s simplistic to think of search engine marketing as just keywords
3. Does take into account consumer intent

Robert of Microsoft shoots off is, “Misty, Misty, Misty”.

• Robert first asks – How can you possibly expect humans to do things like manage a tail of keywords?
• Misty says Robert has misconstrued her point and goes on to say – 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 and mostly have a delayed reaction. 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.

Time’s up. Next is Chris to defend the opposite.

Chris starts on his defense by delving into the evolution of bid management and how during 2001-2 most folks took advantage of search and bought a lot of keywords. Further. They created spreadsheets to keep a check on which to bid and which to let go. Then, Yahoo’s Panama and Google took over transparent marketplaces. Further, Chris decides to show examples to strengthen his stance.

1. Chris shows a graphical presentation of an ad campaign. The graph shows daily ad spend on X axis and number of transactions/signups on Y axis. The purpose of the graph being the rise in signups and expenditure increases.
2. Secondly, bid management tool is not dead and is more required as ad agencies do not have time for advertising and merchandising as they are caught trying to manually achieve what the tools can, automatically.
3. Companies like DoubleClick, Efficient Frontier, aQuantive, Did-It are still selling Bid management.
4. Google’s API are charged, which can only be explained by the fact that people are purchasing them. Most search engines have their own API and those that don’t are constructing it.

Next the audience is entertained with a cross-examination by Peter.

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.

Peter submits a 4 minute rebuttal saying: 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, who is apparently impressed says, “Peter’s summary was brilliant”.

Next up is Robert, who believes that bid manage is not dead

• 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 management is to do things efficiently so that advertisers can address other points that are more important.
• Misty feels her co-panelists agree with her. Further, she clarifies saying – You do need tools to get the job done without which makes it more efficient. Real search marketing looks at the bigger picture. Technologies change, so do rules. However, a keyword is similar to a TV advertisement. All in all, with bid tool management solution you’ll limit your growth.
• 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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