Let’s Just Call a Bid a Bid

Posted on Thursday, August 27th, 2009 by Print This Post Print This Post

Categories - SEM

All of the major search engines use a 'second price' mechanism to determine the price-per-click (PPC) in their auctions for ad positions. Each advertiser selects a bid that specifies the maximum amount they are willing to pay per click, but the actual cost of a given click is (based on) the bid of the advertiser in the slot below them.  At most, the bid of the advertiser in the slot below can be high enough to cause the actual CPC to be the same as the bid, which is why the 'bid' is sometimes referred to as the 'maximum CPC'. Unfortunately, some have conflated these two terms and refer to this quantity as the 'maximum bid' (or just 'max bid').  This is incorrect, because an advertiser's bid is not their "maximum" bid, it's just their bid.  If I change a bid 10 times in 10 days and then someone wants me to go back and find which bid among those was the highest, would anyone actually say: "Please find the maximum maximum bid you used?". Of course not.  It sounds silly then to refer to the bid as the 'max bid'. Others refer to the bid as the 'bid price', which at worse sounds a bit redundant but is actually downright contradictory.  A 'bid' is an offer of the amount one is willing to pay to buy an item.  A 'price' is the amount a seller is willing to receive to part with an item.  So, the phrase 'bid price' falls somewhere between silly and meaningless. An older version of Google's Bid Simulator confusingly referred to the 'bid' as the 'Max. CPC bid', which actually is redundant.  On the newly updated version of this feature, they've come to their senses and rightly begun referring to it as just the 'max CPC'. oldnewBidSim The impact of nearly-colliding terms such CPC, CPM and their MIN/MAX  variants can be felt not only in using Google's Adwords user interface directly, but at levels where systems like The Search Agency's AdMax Online Marketing Platform integrate with Google via programmatic interfaces based on the very same terminology. The idea I'm discussing here is not particularly complicated, but given the number of almost-indistinguishable abbreviations and similarly named concepts in the search engine marketing industry, it takes being a bit retentive to prevent necessarily polluting the discourse with conflicted or vacuous terminology. So, all I'm asking is: please let us stop using terms like 'max bid' and 'bid price' when referring to a bid.  Just call it a 'bid'.  When you change a bid's amount, you can say that you changed the bid's amount or the bid's level, but please don't say that you 'adjusted the max CPC bid price' or any other such nonsense. And thanks to Google for discarding the 'max CPC bid' terminology in favor of just 'max CPC'.  It's a small step, but it's a step in the right direction.

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One Response to “Let’s Just Call a Bid a Bid”

  1. Bradd Libby says:

    If I hear anyone use the word “efficiency” one more time without supplying a definition, I think I’ll scream.

    Some people use it to refer to CPA or ROI. For example, I got an e-mail from someone this week that said: “Keep that in mind when you are doing bidding – we can’t afford to push things unless they are efficient.”

    Some use it to refer to CR (conversions/click), CTR (clicks/impression), or CPI (conversions/impression). An “efficient” word generates a lot of conversions, financial considerations aside.

    Auction theorists use the word “efficiency” to mean the revenue delivered to the auctioneer, plus the revenue delivered to the advertisers. An “efficient” auction system is one that supplies a large revenue to these sellers.

    There are a lot of poorly defined and inconsistently used terms like these in the SEM/SEO world. I think it mostly has to do with the industry being so young.

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