How to Use Bid Tools Effectively
Bid tools, such as Overture's bid tool, tell advertisers the current bid amounts for specific keywords. By simply typing in a keyword or phrase in the bid search advertisers can learn how much other advertisers are bidding on certain keywords. The bid tool will tell who the top bidders are and how much they are willing to pay per click, with the listed maximum bid.

Smart advertisers will use this tool to find out the most profitable bid amounts. For some advertisers being #1 is the goal- in which case bidding higher than the top bidder is the way to go. For most others, however, determining natural price breaks in the bids and bidding just above is a good system.

For example: The top bidder for keyword "widgets" maximum bid is $12.01. This means this serious bidder is willing to pay up to $12.00 each time someone clicks on their ad. By using the keyword bid tool you notice that the #4 bidder for "widgets" is only bidding a maximum bid of $6.50. This means that you only have to have a maximum bid of $6.51 to beat out the #4 bidder. The break from the top 3 to the number four bidder is a natural price break in the bids. Look for these types of breaks to bid no more than you need to for top listings.

Another useful reason to use bid tools is to keyword 'window shop'. If the keyword you want requires too high of a maximum bid for your ad budget to be number one, you can easily check around for the prices of other keywords. If you look carefully you may find a gold mine keyword that has a low cost per click bid amount that other advertisers have not yet discovered.

Where to Find Bid Tools
Most pay per click engines will offer advertisers some sort of bid tool. Google has a good one, but you have to log in to your account to use it. Overture's bid tool is free to use and highly effective.