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lowering in bid when less competition
kila_m




msg:1130822
 3:33 pm on Nov 17, 2003 (gmt 0)

If I am the only person bidding on "widgets" and its currently set at a minimum cpc of say 20p.. should I lower it to the minimum of 4p?

Would I get equal exposure / impressions?

 

Robsp




msg:1130823
 3:38 pm on Nov 17, 2003 (gmt 0)

I would certainly do this. You can always raise it when competition kicks in.

Shak




msg:1130824
 3:44 pm on Nov 17, 2003 (gmt 0)

I do this all the time, start high, and then lower a few pence/cets per day, down to minimum.

Shak

hobbnet




msg:1130825
 6:55 pm on Nov 17, 2003 (gmt 0)

I do this all the time, start high, and then lower a few pence/cets per day, down to minimum.

Ditto.

Advertiser 123




msg:1130826
 2:00 am on Nov 18, 2003 (gmt 0)

Kila,

The Adwords description states that you shouldn't worry about lowering bids the "Auto Discounter" will do it for you to 1 cent above your competition.

That basically means there should be no gaps between your bid and your closest competitors.

If you base your decision on what the "Auto Discounter" does (as described on Adwords) then you shouldn't have to lower your bids or worry about your prices (it will monitor them for you) but after reading what other advertisers posted I am not sure.

If we ever get a reply from the Adwords Advisor related to pricing then we will know better.

ninhld




msg:1130827
 2:51 am on Nov 18, 2003 (gmt 0)

The Adwords description states that you shouldn't worry about lowering bids the "Auto Discounter" will do it for you to 1 cent above your competition.

That basically means there should be no gaps between your bid and your closest competitors.

If you base your decision on what the "Auto Discounter" does (as described on Adwords) then you shouldn't have to lower your bids or worry about your prices (it will monitor them for you) but after reading what other advertisers posted I am not sure.


You still should worry about your CPC. Lets say your CPC is $5, and the next competitor is bidding $0.10
If all have the same CTR, you'll have to pay around $0.11, thats OK.

But if there's a new competitor arrives, and he bids $4.90/word, you'll have to pay around $4.91/words

Advertiser 123




msg:1130828
 3:18 am on Nov 18, 2003 (gmt 0)

ninhld,

You said:

_________________________________________________________

You still should worry about your CPC. Lets say your CPC is $5, and the next competitor is bidding $0.10
If all have the same CTR, you'll have to pay around $0.11, thats OK.
But if there's a new competitor arrives, and he bids $4.90/word, you'll have to pay around $4.91/words

_________________________________________________________

In that situation isn't your competitor suppose to pay $0.11 and then you (1 cent above your competitor) that would be $0.12 if all ctr's are equal?

AdWordsAdvisor




msg:1130829
 3:43 am on Nov 18, 2003 (gmt 0)

If we ever get a reply from the Adwords Advisor related to pricing then we will know better.

Advertiser_123, my sincere apologies for the delay in answering your earlier question.

I mentioned in another post that answering your question requires that I find a quiet half hour with a calculator. Honestly, I have not had time to do that yet. My apology.

Things do get rather busy here. As an example, as I type it is almost 8:00 in the evening, and I am just now eating lunch.

No lie.

Thanks for your patience.

AWA

ninhld




msg:1130830
 12:39 pm on Nov 18, 2003 (gmt 0)

In that situation isn't your competitor suppose to pay $0.11 and then you (1 cent above your competitor) that would be $0.12 if all ctr's are equal?

I'm almost sure that I'm correct in this situation.
You can test this with adwords' estimate tool.
Just find a exact keyword with only 3-4 ads, play with your CPC and you'll see the result.

Advertiser 123




msg:1130831
 1:10 am on Nov 20, 2003 (gmt 0)

ninhld,

_________________________________________________________

You still should worry about your CPC. Lets say your CPC is $5, and the next competitor is bidding $0.10
If all have the same CTR, you'll have to pay around $0.11, thats OK.
But if there's a new competitor arrives, and he bids $4.90/word, you'll have to pay around $4.91/words

_________________________________________________________

then you said

______________________________________________________

I'm almost sure that I'm correct in this situation.
You can test this with adwords' estimate tool.
Just find a exact keyword with only 3-4 ads, play with your CPC and you'll see the result.

_____________________________________________________

ninhld,

If you are sure about this then that means that based on what you stated from your tests you would be paying $4.90 per click and your competitor would be paying $0.11 for 1 position below yours and if that is true then google is overcharging you $4.78 per click.

Of all the things you mention my favorite tool the "estimator" (some others call it GUESStimator). I can only say that if the tool google offers to "estimate prices" is working as accurately as their "auto discounter" (minimizing prices) then we are in trouble.

Adwords Advisor its been 2 weeks would you reply.

AdWordsAdvisor




msg:1130832
 3:11 am on Nov 20, 2003 (gmt 0)

Yes, Advertiser 123, it has been many days - again my apology.

You originally wrote:

If you have only 4 bidders each get a click (using those ctr's as averages to simplify)

A sets maximum Bid at $1.00 CTR 3%
B sets his maximum Bid at $0.70 CTR 2%
C sets his maximum Bid at $0.50 CTR 1%
D last bidder maximum Bid at $0.10 CTR 1%

What would A, B, C and D have to pay?

What will the positions for each be?

OK. Position is determined by your rank number compared to your competitor's rank number. Rank number is defined as the keyword's Maximum CPC multiplied by the keyword's CTR. For example a keyword with a Max. CPC of $0.40 and a CTR of 1.8 has a rank number of .40 multiplied by 1.8, or .72

Note: the higher the ad's rank number, the higher the ad's position.

CPC pricing is adjusted so that one pays the minimum amount required to have a rank number just slightly above your nearest competitor. To calculate, we take the rank number of the nearest competitor (lower than you), and increase it by a tiny fraction. Then, using that 'new' rank number and your existing CTR, we calculate your CPC.

To simplify, essentially your CPC = 'new' rank number divided by your CTR.

In Advertiser 123's example, rank number and position look like this:

A sets maximum Bid at $1.00 CTR 3% - Rank number = 3, and Position = 1
B sets his maximum Bid at $0.70 CTR 2% - Rank number = 1.4, and Position = 2
C sets his maximum Bid at $0.50 CTR 1% - Rank number = 0.5, and Position = 3
D last bidder maximum Bid at $0.10 CTR 1% - Rank number = 0.1, and Position = 4

In terms of each advertiser's CPC in the above example, it looks like this:

A sets maximum Bid at $1.00 CTR 3% - CPC paid = 47 cents
B sets his maximum Bid at $0.70 CTR 2% - CPC paid = 26 cents
C sets his maximum Bid at $0.50 CTR 1% - CPC paid = 11 cents
D last bidder maximum Bid at $0.10 CTR 1% - CPC paid = 05 cents (minimum CPC)

With all that said, I feel that the above information is of limited practical value, beyond simply understanding how it works. I say this because:

* positioning is variable, and literally changes from one moment to the next. So calculating it gives one information that is outdated long before you've even finished the calculation.

* the calculation also requires that you know your competitor's CTR, in order to figure our their rank number. However, this information is the confidential 'property' of your competitor.

When all is said and done, it boils down to focusing on creating well targeted ads & keywords that get great clickthrough rates, then using a competitive Maximum CPC.

I hope that this info will prove useful, and I do regret that it was so long in coming.

AWA

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