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Jan 04, 2024How to Set Bid Guardrails in PPC Marketing | by Jose Parreño | Oct, 2024 | Towards Data Science
Oct 16, 2024Member-only story
Jose Parreño
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Bidding algorithms determine how much to bid for a specific ad placement. In the fast-paced world of digital advertising, where there are hundreds of players competing for an ad-slot and where the referee (i.e. advertising platforms such as Google, Meta, Amazon, etc.) changes rules continuously, these dynamic algorithms are essential. While they are powerful, they are also inherently complex.
The core challenge of bidding lies in the dynamic nature of auctions. Prices can fluctuate rapidly based on factors like user behaviour, time of day, and market demand. Without proper oversight, a bidding algorithm can either overbid, wasting valuable ad spend; or underbid, missing out on critical opportunities. This volatility can lead to either skyrocketing costs with little return or, missed impressions that could have driven significant value.
To prevent these extremes, it’s crucial to implement guardrails that ensure the algorithm operates within reasonable boundaries.
To prevent these extremes, it’s crucial to implement guardrails that ensure the algorithm operates within reasonable boundaries.