Competition in online marketing can be brutal.
You’re rarely going to be the only affiliate that wants to buy traffic on a specific ad spot or search term. Due to this high demand, advertising networks like Google AdWords and FaceBook utilize a bidding system to determine who will receive the most traffic.
Bidding metrics vary in complexity from one traffic source to another, but they’re all based on the same core principle: the more you bid, the more traffic you get.
While this general idea should always apply, sometimes ad platforms reward people based on their budget, history with the source, and consistency of their spend. For example, AdWords would give preference to a large corporation spending $10k/day everyday over the affiliate that wants to spend $11k/day once a month.
Furthermore, your bid on an ad placement also determines the ad rotation of that spot. This is a key concept to understand, because it explains why sometimes bidding higher will actually garner a higher conversion rate and be more profitable than a lower bid.
Below is the bid table for a premium spot on the most popular adult site in the world.
This screenshot just shows the top ~10 bids for this ad, there are hundreds more below them that are receiving negligible amounts of traffic.
As we can see, the top two affiliates buying traffic on this spot are receiving almost 1/3 of all of its traffic. What isn’t shown in this table is the ad rotation, and that the high bidders are getting their banners seen before the rest.
Banner blindness kicks in after a few refreshes of a page, and having your ad be the first shown to a visitor will dramatically increase your CTR.
This is why higher bids can often yield higher ROIs, despite the cost increase. Your CPM can be 5-10% higher, but if your CTR jumps 20%, then you’re in the clear.
Of course, split-test with all kinds of bids to find out what is working best and throwing the highest EPC.
Be very careful when you’re testing. I don’t even know how many times I’ve set a sky-high bid and forgot to lower the budget, blowing hundreds of dollars on a fruitless test.
TL;DR – You’re not the only person that wants traffic from huge sites like Google and Facebook. In order to keep things fair, these sites allow you to compete against other people. Higher bids usually get more traffic and convert better. Test your bids as you would test banners, ad text etc. and see what works for you.