(Cross-posted from the Inside AdWords Blog)
Last month we launched a new feature of AdWords called Bid Simulator. Bid Simulator takes some of the guess work out of cost per click (CPC) bidding by estimating the number of clicks or impressions you could have received if you had used a different maximum CPC bid. Today, I thought I would take the opportunity to help you make the most of this new feature by explaining how to use the data from Bid Simulator to maximize the profit from your marketing investment.
In general, when you increase your maximum CPC bid for keywords on search you are able to generate more clicks to your site. This may be because your new bid qualifies you to appear higher up in the Sponsored Links on the search results page, or because your higher bid qualifies your ad to appear in new, more expensive auctions. The goal for you as an advertiser is to decide whether or not these additional clicks come at a cost that is still profitable for you.
To make this decision, you need to compare your expected value per click to your incremental cost per click. Your value per click is how much a click for a particular keyword is worth to you, on average. Your incremental cost per click is how much extra you are paying, on average, for the extra clicks you are getting from your higher bid. When your value per click is higher than your incremental cost per click it makes sense to increase your bid. On the other hand, if your value per click is lower than your incremental cost per click, you probably want to decrease your bid.
To learn more, you can watch the tutorial video below. In the video, I'll show you how to calculate these values, how to interpret them and how to use the data to maximize the profit from your marketing investment. My team and I are always looking for ways to help make the AdWords auction easier to understand so if you have other topics that you'd like us to address, please leave a comment on the video and we may be able to make it a topic for a future video.
Watch it on YouTube: http://www.youtube.com/watch?v=jRx7AMb6rZ0
Wednesday, September 16, 2009
New AdWords bidding tutorial
Teaching computers to read: Google acquires reCAPTCHA
The image above is a CAPTCHA — you can read it, but computers have a harder time interpreting the letters. We tried to make it hard for computers to recognize because we wanted to give humans the scoop first, but we're happy to announce to everybody now that Google has acquired reCAPTCHA, a company that provides CAPTCHAs to help protect more than 100,000 websites from spam and fraud.
Since computers have trouble reading squiggly words like these, CAPTCHAs are designed to allow humans in but prevent malicious programs from scalping tickets or obtain millions of email accounts for spamming. But there’s a twist — the words in many of the CAPTCHAs provided by reCAPTCHA come from scanned archival newspapers and old books. Computers find it hard to recognize these words because the ink and paper have degraded over time, but by typing them in as a CAPTCHA, crowds teach computers to read the scanned text.
In this way, reCAPTCHA’s unique technology improves the process that converts scanned images into plain text, known as Optical Character Recognition (OCR). This technology also powers large scale text scanning projects like Google Books and Google News Archive Search. Having the text version of documents is important because plain text can be searched, easily rendered on mobile devices and displayed to visually impaired users. So we'll be applying the technology within Google not only to increase fraud and spam protection for Google products but also to improve our books and newspaper scanning process.
That's why we're excited to welcome the reCAPTCHA team to Google, and we're committed to delivering the same high level of performance that websites using reCAPTCHA have come to expect. Improving the availability and accessibility of all the information on the Internet is really important to us, so we're looking forward to advancing this technology with the reCAPTCHA team.