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How Does AdWords/Bing/Yahoo Ad Bidding Actually Work?
I’ve pondered the question for years. I personally managed all of our AdWords and Microsoft (Bing/Yahoo) advertising and never knew the answer. Everybody I talked to either didn’t know or gave me a different convoluted answer. In 2010, I finally gave up and started my own online investigation.
After much searching, I finally landed on Google Patents. That search engine is a lot easier to use than the United States Trademark and Patent Office’s (USTPO) search engine. Trust me on that one. Google has hundreds and hundreds of patents. I finally drilled it down to what I was searching for.
To cut to the chase and not confuse anybody, I’ll shoot straight to the core: It’s called the “Second Bid Auction” in layman terms. What that means is the highest bidder does indeed win the auction-BUT- he only pays 1 cent more than the second-highest bidder. Being in the transmission repair industry, our most popular and #1 keyword was ‘Transmission Repair” followed by #2 which was the same keyword with a car make as a prefix such as “Audi Transmission Repair.” I discovered I could bid exorbitant bids and never pay it, but I would win the auction. All of my competitors were left wondering why we were always first in a Google/Bing/Yahoo search.
Once I figured out how it works, our business went up $500K/yr. to $1.2M doing transmissions only. I soon learned that most SEM companies don’t know this. But by now, 12 years later, they probably do. In fact, I did a YouTube search and found a video exactly about what I did 12 years ago in a Google Patent search. I’m sure, by now, more people know about this. Here’s a link to the video I found. The date on the video is 4 years ago. https://youtu.be/XcfrBRNCwQk<
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