Bid Management vs. Budget-Based SEM Platforms

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2 What a budget-based platform is all about

This week we bring to you another quality guest post, focused on the differences between bid management and budget-based SEM platforms, courtesy of my friend and colleague Gary Walker of Topside Media. I’ve already outlined my thoughts about Gary in a previous post, so I’ll leave it at that.

The following is actually an excerpt from a post he authored back in November. This hits on the high points of the original post. Thanks again to Gary for sharing his excellent work with Return On Now.

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In today’s post, I’m going to briefly compare and contrast two types of automated platforms: bid management platforms and budget based platforms. We’re going to stick to how they work and what they do (and don’t do), and [we will] avoid using company names [in the process].

What a bid management platform does

At the most basic level, a bid management platform helps automate bidding and some routine optimization and reporting tasks across multiple pay-per-click (PPC) advertising platforms. Think of these as tools that can help a person who already knows how search engine advertising works do it faster and save time on creating reports. While they can save time on routine tasks and reporting, however, bid management platforms do not perform the most complicated, but essential tasks: design robust campaigns and ad groups that align user intent with your company offering, write multiple versions of text ads, analyze and help fix conversion issues with your website, etc.

Further, some of these platforms will take a sizable bite out your budget, and require up to 5% of total spend every month just for using their online tool.

What a budget-based platform is all about

In contrast, on a budget-based platform, you tell the sales rep for the platform (or the many companies that use a private-label platform) how much money/budget you have to spend. This number is then plugged into your business category in their automated platform, and it combines traffic from multiple sources. At the end of the reporting period, you look back to see how many clicks, “web events”, phone calls, or other metrics you got in return for your money. From our point of view, a lot gets sacrificed so that this can be automated. Just one example of features lost: many of the custom geo-targeting features from Google AdWords.

Transparency, or lack of it

In bid management platforms, the cost to the search engine and the cost to the provider of the bid management tool is usually transparent.

In budget-based platforms, you are unlikely to know what percentage of your budget is spent on traffic and how much goes to commission or fees. Generally, though, the bite is a major one. Further, it may not be easy or even possible to determine how much traffic was search traffic, vs. how much was contextual or other types of traffic.

Some would argue that the results, i.e. how many calls or conversions and the associated cost, matter the most. To some extent, we agree with that point, as long as the numbers are the right ones, and they are in fact real. For example, it is also important to know how many clicks, calls, and emails come from the use of your company name as a keyword. Another key metric that is not easy to get is quality of incoming phone calls: how to filter out repeat calls, how many lasted more than one minute, etc.

(Note: if the two examples make it seem like we are splitting hairs, take a deeper look — results from your company name, duplicate calls, and short calls can each be 20% or more of the total.)

Use Automation Wisely

In reading this, you might assume that I am against automation. Far from it. I’m all for automation, so long as it [reduces] work or cost and does not compromise much quality of the process or results. For example, at TopSide, we recently automated two processes that, when done manually, take too much time and do not deliver added value to clients:

Rather than manually testing the websites we advertise (to make sure pages load quickly), we now automatically “ping” these sites at more frequent intervals.
We now have a reporting dashboard that automatically summarizes click, conversion, and other data from the search engines with data from our phone call tracking system.

Although these tools initially cost quite a bit to build, using them helps our clients, and it helps us too.

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Tommy Landry

President at Return On Now

As Founder and President of Return On Now, Tommy Landry provides the vision behind our SEO and SEM methodologies. With over 25 years of business experience and a deep understanding of modern internet marketing techniques, he spends his time providing hands-on consulting, insightful content, and engaging public speaking appearances to Online Marketers of all skill levels.