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10 Tips When Choosing Bid Management Software

Published: December 16, 2007

Author: David Rodnitzky

For those of you who missed this post on SearchMarketingStandard and on Sphinn . . .

During the Q&A section of the panel I participated in this week at PubCon, we got a lot of questions about bid management software. In particular, it seems that everyone in the audience acknowledged the need for it, but no one knew which company to select, nor how to select a bid management software.

So without further ado, my ten tips for choosing bid management software:

  1. Don’t even think about building it yourself. I speak from experience here. Building bid management software requires a full-time team, ongoing maintenance, and a lot of trial and error. It will take you at least a year to build a basic version, and at least two to three engineers to maintain and iterate it after that. And it won’t be as good as the software currently available on the market.
  2. Assess your expertise and what you really need. Assuming you listened to my first tip, you next step is to understand how you are going to use the software. First, let’s talk about your level of expertise. If you are an expert, you may want to let the bid management software run your tail terms (the 98% of keywords that make up 2% of your revenue) and focus on optimizing the head yourself. If you aren’t an expert, you probably need software that can manage everything for you, with a very simple interface, and possibly the option of full-service bid management combined with the software. Either way, you need to know exactly what you want before you start talking to software providers. Otherwise, you might end up paying for a Ferrari when all you really needed was a station wagon.
  3. Understand implementation and de-implementation effort and impact. A lot of bid management software only works if you install a snippet of code on your Web site and if you allow the bid management company to change your URLs on the search engines. This can require significant effort by your internal tech team and changing your URLs in your search campaigns can result in a loss of keyword history (i.e., you will need to pay more to get the same position). Moreover, you need to understand what happens if you end your relationship with the company – will they change your URLs back, or are you stuck with their tracking for the rest of your life?
  4. Always do a trial first. I’ve seen some really great PowerPoint presentations from bid management companies. It turns out its easier to make a good PowerPoint than it is to make a good bid management software. Never sign up for anything until you have taken it for a test drive for at least one month and if possible three or four months.
  5. Set benchmarks for initial and ongoing success. Before you start any trial, understand the status quo of your campaigns. What’s your current revenue? Profit? Margin? Tell the bid management company your actual metrics and tell them what you expect them to hit for them to win your business. Make sure you factor in the cost of their services. For example, if a bid management company wants to charge you 5% of your spend, and you currently have a 10% margin on your spend, you should demand that they at least bring you 15% margin (and probably higher). By the way, most bid management companies will thank you for this – it gives them something tangible to shoot for!
  6. Look for hidden fees. Does the contract include API costs, or do you have to pay these? Is there a charge for consulting and implementation? Is there a minimum monthly bill? Read your contract carefully and ask a lawyer for help if you are at all confused.
  7. Ask for performance pricing. I know my co-panelist Kevin Lee is going to kill me for saying this, but don’t be afraid to ask your bid management company to put some skin in the game. If a company’s bid management software is a good as they say it is, offer them 50% of the incremental profit they make you to prove it! More realistically, perhaps ask them to take a slightly lower percentage of spend in return for a performance bonus if they achieve certain goals (see Kevin, I’m not as unreasonable as I first seem!)
  8. Get a short contract. If possible, try to get a month-to-month contract (though this will be hard to do). If you can’t make this happen, a six month contract is usual very doable.
  9. Be hesitant about handing over your head keywords. For the 50 to 100 keywords that drive most of your revenue, I usually recommend good old human management. Why? Well I believe that a good search analyst just gets an almost intuitive feel for how to grow top keywords, something that computers just can’t do. And managing your top keywords in-house can save you a lot on bid management fees, especially if less than 50 keywords make up 20-30% of your ad spend.
  10. Keep testing new competitors. The bid management world is ever-changing. I see new and exciting bid management companies popping up regularly. Always keep a campaign or two available for the next great thing.

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