Tailor bids to actual search results.
Track your paid traffic by keyword. Look to see which sites bring the bulk of your traffic and build your bidding strategy accordingly. Google ads will likely come primarily from www.google.com and aolsearch.aol.com while Overture ads will likely drive traffic from search.yahoo.com and search.msn.com. Run search queries for your keyword phrase on the search engines that send the bulk of your results and see where your paid ad ranks. Note how many ads are on each page and whether they're full ads or brief ads. Know where you want your ad to show up in the search results. Do you want your ad to be above the fold on the first page or is anywhere on the first three pages of results sufficient? Your max CPC will limit your choices.
Take advantage of bid gaps
Normally, bids are separated by a penny or two. Bid gaps occur when there's a significant price increase to move up one spot in the PPC rankings.
Is it worth almost twice the price to move from spot #6 to spot #5? Now that Yahoo is showing more ads per page and fewer search results, it is probably not worth it. Big advertisers blindly set a CPC across a large group of keywords, causing these bid gaps. Take advantage and fill a bid gap. For example, if your initial max CPC for this phrase was 32 cents, maybe it's worth only bidding 17 cents.
