You might have heard about bidding for ad space, but what does it mean? Well it’s a far step away from the more traditional fixed price or flat rate model, where an advertiser and publisher agree on a price, for example for every click. These fixed prices are based on popularity, therefore value, of different pages on a website. Top time slots cost more too. An advantage is that rates can be low, but advertisers must ensure that their ad reaches their target audience, or they will have paid for useless clicks and missed opportunities. Flat rate spending can mean that a low spend gets low results.
The bid-based model of pay-per-results has rapidly risen to the top of the advertising chain, to prominence. Advertisers compete against each other in private auctions hosted by publishers or ad networks. You set the maximum amount you’ll pay for an ad spot. Bids might include variables like keywords, time slot, location, etc.
The amount you pay is based on the amount of your bid, but it’s not so simple. Usually a winning bidder is charged a little more than the next highest bidder below them, whichever is less. A bit complicated, but the reason behind it is that this avoids bidders having to continually adjust their bids to win an auction.
Advantages of bid-based advertising
Bid-based advertising offers some advantages.
Bid-based advertising offers more flexibility than fixed rate because you are in charge of what price you pay per result. You can bid to get the ranking, position, time slot or location you want.
If your ad is geo-centric, for example in a competitive or expensive city, bidding can be your ticket in. If your ad is time-sensitive, you can outbid your competition for a short period of time. Yes, you’ll pay more, but you will get more of the results you seek.
Bidding rewards experienced advertisers who know the sweet spot of how, where, when and how much to bid. Beginners can learn quickly by starting with low bids then slowly increasing them.
It doesn’t have to cost you much if you want to win the bidding in a niche. You drive bids up until your competitors drop out, being unable or unwilling to compete with your price. Will it cost you? Yes. Will you recoup the spend? If you deliver on what you offer, then you’ll more than recoup your spend in the form of getting your desired results.
There are big advantages to bid-based advertising and that’s made it surge in popularity. Now that you know its finer details, is bid-based advertising right for you?