Automated Bid Optimization for Keyword Advertising Profit
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
Advertisers face challenges in managing and optimizing keyword bids for thousands or millions of keywords, aiming to maximize profit while ensuring a return on investment in online advertisement systems.
Innovation Solution
A method for calculating estimates of click-to-action conversion rates, impression-to-click rates, and bid amounts for specific keyword groups, identifying target positions that provide the greatest estimated profit, and generating bids to achieve these positions, using metric data and generalized linear models for analysis.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Measurement precision
If manual bid management is used for thousands or millions of keywords, then advertisers can control each bid individually, but the time and effort required to manage and optimize bids becomes prohibitively large
Solution Approach 1:
The system enables automated bid management where the computer automatically calculates optimal bid amounts and adjusts bids across thousands or millions of keywords without requiring manual human intervention for each individual bid adjustment
Solution Approach 2:
The system changes the approach from manual parameter adjustment to automated parameter optimization by using algorithms that calculate bid amounts based on multiple factors including conversion rates, click-through rates, and budget constraints
2Productivity
If automated bid systems are used to manage large numbers of keywords, then time consumption is reduced, but the complexity of the bid management system increases
Solution Approach 1:
The system performs multiple functions within a single automated platform including data collection from multiple sources, conversion rate calculation, bid amount optimization, and automatic bid adjustment across numerous keywords simultaneously
Solution Approach 2:
The system introduces an automated bid management system as an intermediary between advertisers and the advertising platform, handling the complex calculations and adjustments that would otherwise require direct manual management
3Reliability
If bid amounts are increased to improve advertisement positioning, then the probability of obtaining desirable positions increases, but the cost increases and may exceed the return on investment
Solution Approach 1:
The system dynamically adjusts bid amounts by calculating optimal values that balance position acquisition probability with cost constraints, using conversion rate data and budget parameters to determine the precise bid amount needed for each keyword
Solution Approach 2:
The system uses feedback from actual conversion data and performance metrics to continuously refine and adjust bid amounts, ensuring that bids are optimized based on real-world results rather than static predetermined values
Data Source
AI summary
The present invention is directed towards systems and method for generating a bid amount for one or more keywords for a display of an advertisement associated with a given keyword. The method comprises calculating estimates of one or more advertising metrics for one or more keywords associated with one or more advertisements displayed at one or more positions. Target positions are identified for the one or more keywords at which a return on investment earned by the display of one or more advertisements in response to a query that matches a given keyword exceeds a threshold by a given probability on the basis of the estimates to select a given target position that provides a greatest estimated profit. Bid amounts are generated for the one or more keywords in order to obtain the display of associated advertisements at the given target position.