Posted by Isiah Drake, Manager, Bid Strategy Team
Bid jamming, also known as cost per click inflation, is the technique of bidding one cent below another advertiser’s max bid for a certain keyword. This causes the advertiser to pay their max bid price every time the “jammed” ad is clicked on, draining their budget and exceeding their daily spend limit. Bid jamming can backfire if the advertiser realizes that they are being jammed. The advertiser can then lower their bid one cent below the bid jammer’s price, thus jamming the competitor that jammed them in the first place. This could go back and forth indefinitely.
Bid jamming is caused by bidding up keywords in the marketplace where an advertiser should not. Here are some signs that an advertiser may be jammed:
1. The campaign is capping out, despite the use of a position strategy
2. There are no other competitors for this keyword in the auction
3. The keyword’s average cost per click is higher than recent holiday cost per click
4. Broad match keyword bids are higher than the exact match keyword bid
Performance-based bidding technology is the most scalable way to combat bid jamming. If a competitor tries to inflate your CPCs, a PBB technology could calculate the ROI, decide if costs outweigh the revenue returned and decide what the right bid should be.