Digital Marketing

Things You Should Know About Portfolio Approach In Bid Management

Portfolio Approach In Bid Management – Bid management is truly fascinating and discipline I found and not because I consider decreasing or increasing Max Cost Per Clicks’ something to write about home. More often, it is the ability to improve significantly the performance of your SEM campaigns via advanced and statistical modelling with the help of the mapping of historical performance trends in your account that correlate spend to conversion.


Things You Should Know About Portfolio Approach In Bid Management

Tool for smaller automation sets typically come with out of the box solutions for bid management – insert bidding rule-based. Rule-based bidding is a system will evaluate ROI on a keyword by keyword basis – which sounds great until you have more than 12 keywords in your account. In the case of large SEM programs, rule-based bidding results fail to be effective because the volume in the majority of campaigns turns to be skewed towards a selected set of keywords. Without the availability of sufficient amount of historical data, rule-based systems will not be able to competently manage the majority of keywords in your account – usually resulting in long tail keywords receiving in very low and static bids. Supplementing complications, rule-based systems are also unable to make trade-offs between keywords – meaning if you’re asking for an overall $14 Costs Per Article keywords in your account and it will never reach that ceiling, even if there may benefit our overall ROI.


Unless your KPI is something very generic and increase overall clicks, we will steer clear of systems of rule-based bidding– the Google can do this kind of thing for us for, and it’s free, anyways.

Portfolio systems can gain the unique insight into a keyword’s impact (think bid change) on the account’s performance as a whole by modelling the keyword performance. Portfolio modelling is based on three things: marginal-based optimization, dynamic clustering, and performance forecasting. Portfolio modelling, as opposing to rule-based systems, is more advanced  – portfolio systems utilizes algorithms that compile a large amount of historical data to the performance of model keyword.

Dynamic Clustering –

Unlike rule-based bidding, data scarcity is not a problem in portfolio bidding. Portfolio systems use a tactic called data clustering in which keywords having similar traits (destination URL, Metadata, campaign structure) are grouped together. Data clustering allows portfolio systems to build models for keywords by bidding them similarly to their counterparts. Dynamic clustering is a vital tactic used to increase the performance of your account.

Marginal-Based Optimization –

Portfolio systems is a system that performs thousands (if not millions) of calculations each and every day and to understand the opportunity cost of each additional dollar spent on a keyword. Though focusing on the edge or margin return, portfolio systems will bid on your account holistically for maximizing the performance. Once remember our $14 CPA example from above? In portfolio bidding, keywords are bid below and above CPA thresholds to return maximum while maintenance of your overall CPA requirements.


Performance Forecasting –

All components of the portfolio bidding reach a climax or point of highest development in the ability to forecast future performance. The main component of statistical modelling the portfolio systems utilize historical weighting  – means, each single keyword is given a certain level of significance in the portfolio based upon the amount of historical data the system has on that keyword. Portfolio models forecast future performance through historical weighting, and it is based upon a keyword’s historical data, events, and trends.

Portfolio Bid Strategy: Definition

An automated and goal-achieving bid strategy that groups together multiple ad groups, campaigns, and keywords.

Portfolio bid strategies will automatically set bids to help you to reach your performance goals as mentioned below.

  • Portfolio strategy will be stored in your Shared Library once it is created. For managing your portfolio bid strategies and tracking their performance, this is the central location.
  • Use the Ad Groups, Campaigns, and Keywords tabs to add items to a portfolio bid strategy.
  • Earlier the Portfolio bid strategies referred to as “flexible bid strategies.”

Choosing a Lookback Window for Bid Management

Once when the goals are defined, the next big question is that what lookback window to use or what is the ranges of date to look at when calculating new bids. If you are looking at a date range and that is too short, you may end up setting bids too aggressively based on recent changes in the performance that may not signal new long-term trends.

Looking at the other hand, if your lookback window is too long, your bid changes could be too preservative and take too long to address a recent change in user behaviour.  

It seems like something has changed recently that may deserve a further investigation in the former case. In the latter case, probably it’s safe to simply lower the bid.

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