41% of all clicks go to the first three paid ad positions. Whilst understanding PPC (pay-per-click) advertising can feel overwhelming if you’re new to it, setting up paid advertising is often vital for seeing success online.
One aspect of a PPC campaign that needs to be set up and managed effectively is your bidding strategy. There are two bidding options for your campaign - flat rate and bid based. Both strategies have advantages and disadvantages, so we’ll go through what they are and how they differ so you can make a more informed decision for your business.
Flat Rate Strategy
Flat rate strategies are a popular choice because they’re much easier to manage. With a flat rate strategy, you pay a fixed amount for each click you receive, regardless of factors like competition or time of day.
For smaller businesses who have a tighter budget to maintain and want to ensure their PPC expenses are manageable and remain consistent throughout the campaign, flat rates are a particularly good strategy.
Pros to Using a Flat Rate Bidding Strategy
- Straightforward to manage: Flat rate bidding is ideal if you don’t have much experience with PPC campaigns because they’re relatively easy to manage. As the rate is flat, you don’t need to analyse bidding data or adjust bids based on performance, you just set the amount you wish to spend.
- Predictable costs: One of the biggest advantages to using a flat rate strategy is the control it gives you over your budget. You can set a fixed daily or monthly budget without the fear of over spending - especially ideal for businesses with limited resources.
- Consistency: With a fixed cost per click (CPC), you are likely to have a more consistent flow of traffic. This is good for businesses that want traffic without the unpredictability of fluctuating costs.
Cons of Flat Rate Bids
- Limited flexibility: Since you can’t adjust bids based on performance, your flexibility is limited. If one of your ads is performing particularly well, you’ll still pay the same amount per click, which could be underpriced compared to your competitors.
- Low ad position potential: If your bid is lower than your competitors, your ad might not appear in a prime position, which can lead to reduced visibility and a lower click through rate (CTR).
Bid Based Strategy
Bid based strategies require a little more attention. Instead of setting a fixed daily or monthly amount, you set separate bids for different keywords or ad placements. Bids are typically put through an auction system, in which you compete against other advertisers for the top spot in the search engine results page (SERP).
Whilst this strategy is more complex and requires a little more knowledge and experience, it does provide an opportunity for more optimised results.
Advantages to Bid Based Strategies
- Flexibility: Bid based strategies offer a better level of flexibility as you can adjust your bids in real time based on market changes and keyword performance. Doing this allows you to get the most out of your PPC campaign.
- Performance optimisation: Because you can modify bids based on performance, you can increase bids on high-performing keywords and reduce bids on ones that aren’t performing as well as you’d hoped. Putting more focus into keywords that drive the best results ensures you are only paying for clicks that are likely to convert.
- Achieve higher positioning: You will have more opportunity to outbid your competitors to secure ads in higher positions - meaning you’ll be more visible in the SERPs. This is especially important for businesses in highly competitive industries, where ad positioning can have a significant impact on your CTR.
Bid Based Strategy Disadvantages
- Less predictability: Unlike with a flat rate option, bid based strategies come with cost fluctuations. When a competitor increases their bid on a keyword, your CPC may also increase. Additionally, you have to contend with factors such as ad quality and timing, that can impact your performance. This makes it much more difficult to predict outcomes for your ad campaign.
- Requires more monitoring: In order to ensure you’re putting your money in the right places, you need to frequently monitor the performance of your ads. This can be time consuming and calls for more expertise in PPC management, making bid based strategies less ideal for beginners.
Which Strategy is Right For You?
If you’re limited on resources and have less expertise in PPC, a flat rate strategy may be more beneficial as it’s simple and gives you more control over your spending.
If you have plenty of expertise in PPC and have the time and resources to monitor and reiterate your campaign, a bid based strategy may provide better results. Being able to adjust your bids in accordance with ad performance and competition can result in a high return on investment (ROI) and better visibility in the SERPs.
Ultimately, both strategies can yield excellent results when done correctly. Whether you use a flat rate or bid based strategy depends entirely on your goals, level of expertise, budget, and how much time you’re willing to invest into your campaign.
If you’d like expert help setting up or managing your PPC campaign, get in touch with us today.
