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Google AdWords Forum

Estimate Cost Per Click Calculations Gargbage
How much longer can we put up with this?

 8:10 pm on Dec 9, 2003 (gmt 0)

For a long time I've wondered why Google can't just tell me how much I'd pay if I changed my price right now. Overture does it. Other CPC sites do it.

AdWordsAdvisor claims there is a 3 hour lag in reporting (not just for prices but for clicks and impressions) but it sure feels longer than that sometimes.

Today was a perfect example. Sitting at number 1 on a term. But a competitor swooped in and clearly bid higher to be number 2. Here's how it broke down:

At 10 AM eastern US time, my average CPC was .45 cents. As of 3 PM it is .60.

Now, at 10 AM when I went to change price bid and hit the estimate button, it said I was paying only .23 cents per click. Clearly, this was not so.

But... I just guessed that google hadn't noticed the change in competition yet. I left my bid unchanged.

When I checked now at 3PM, the competitor had left (it's a comeptitive term, not for the faint of heart). The CPC average was, as I said, up to .60 cents.

But quess what? When I went to change prices and estimate traffic, it still said my estimated CPC was .30 cents.

What gives? How much longer are we as advertisers going to put up with the fact that we have zero realtime visibility or accurate estimates in terms of the price we're paying, or even our ranking! I've had numerous days where we've been number 1 all day, but Google showed us being 2.9!



 8:17 pm on Dec 9, 2003 (gmt 0)

zero realtime visibility

Do you really need this? I mean, do you really know what you paid over the last hour to run your advertising effectively?

If you're consistently changing your advertising EVERY HOuR (or more frequently!), I might argue that you have a problem and should consider one of the many tools available to you for bid management. There's no reason you should be checking this every hour.

Do you really want to check your AdWords more than once every three hours?

In any case, to reiterate what I've said above, you might find a bid management tool very useful in solving your percieved dilemia. There are multiple tools on the market that will automatically modify your bidding to let you adapt to what's going on in your bid space, so you don't have to spend a ton of time every day watching it yourself. Consider checking into such a program.


 8:23 pm on Dec 9, 2003 (gmt 0)

> being number 1 all day

It doesn't really matter much of a difference between number 1 & 2, as long as you are displayed in the SERPS (also AOL etc).

Generally, if i were to buy some stuff, i would check more than one Adword before buying it. I guess, so do others.

I think, along the lines of the previous posters, your time can be utilized in a better way :)


 8:31 pm on Dec 9, 2003 (gmt 0)

C'mon guys, I think he has a valid complaint. Just because most of us don't need it doesn't mean that nobody does. If it's a high cost keyword, it's all the more vital to have some reliable realtime info.


 8:38 pm on Dec 9, 2003 (gmt 0)

BakedJake, et al:

I never said I checked every hour. I would say on average I check once a day, maybe 2.

Please remember what I said in my post: I noticed a new agressive competitor. I wanted to move agressively to counter his arrival. I either wanted to make it expensive for him to be there and thus shore up my number 1 position, or change my price to make my co-existence with him more affordable.

Why would you not want the ability to do this (i.e., have immediate visibility and the ability to adapt to changes that happen in real time on the web) even if you only OCCASIONALLY check your position.

I suspect that you guys have 1,000's of keywords and just go for branding. Thus, these sorts of things are unimportant to you. Others of us only have a couple dozen or less, and each one is very important. We need the ability to be nimble and make changes based on (at the very least) recent and accurate info.

I'm happy you have other ways to spend your time, but I have to make a living, and monitoring my advertising is important to me.


 8:52 pm on Dec 9, 2003 (gmt 0)

Considering that CTR has a large impact on the actual position, I would think that it would be hard to stay on top of a constantly changing target. Even realtime data shown would only valid for a few minutes at most depending on the number of searches / minute on your term. I'm personally more concerned with daily and weekly figures since that has less variables like your flash in the pan competator. Determine how much you are willing to pay, set that as your Max CPC and put your time into improving your ads and your site so that both your CTR and Conversions go up.


 9:00 pm on Dec 9, 2003 (gmt 0)


Yes, I agree that CTR makes or breaks you on Google, which is what makes it (despite all the recent chaos) still the best CPC company.

However, consider this scenario:

Let's say I have a business that relies 70% on one keyword (not exactly my position, but close... some market segments are extremely specific). So, I can't afford to just take the average of a month. Being cost effective in the time frame of a week, or even an afternoon is important.

Let's imagine I bid regularly on keyword X. I set myself at a CPC of $2.00. Usually, because of my high CTR, I only pay $0.35 per click. I spend $2000 a day on this and make $4,000.

Ok, let's say someone gets frisky and decides to challenge me in the $2.00 range. Suddenly, instead of paying $0.35 a click, I'm paying $1.25. This could go on for days at a time, and suddenly I'm spending $6,000 a day... more than I am taking in.

You can see how that could get expensive.

So... my point is...

I would love the ability to adjust immediately. Either underbid my rival and let my superior click throughs make it expensive for him, or remain on top and wait him out.

But I can't make either decision because despite the fact that I notice his arrival in real time, and can see that my CPC has gone up, I can't effectively guauge what effect changing my pricing would do... since AdWords is so slow in it's reporting of CPC.

[edited by: brianmcc at 9:06 pm (utc) on Dec. 9, 2003]


 9:04 pm on Dec 9, 2003 (gmt 0)

It occurs to me that a response to the above would be:

"If you only want to pay $0.35, then why not set your price at $0.35? $2.00 seems excessive."

So let me put the converse this way: I want to stay #1 at all costs. If I pay $0.35 and suddenly someone pays $1.00 and leaps ahead of me... it would be valuable to me to know how high I must bid to top him IN REAL TIME. So I can make my decisions accordingly.

Bottom line: I understand the lag in reporting clicks and impressions. I'd rather they be accurate rather than fast. But if I want to pay for a keyword, I want to know RIGHT NOW what it will cost me.

Overture and everyone else does this. I know if I bid $0.35 cents on Overture, then that is what I will pay as soon as my ad goes live.


 9:10 pm on Dec 9, 2003 (gmt 0)

Let's say I have a business that relies 70% on one keyword


Actually, I have a question:

I'm paying $1.25. This could go on for days at a time, and suddenly I'm spending $6,000 a day... more than I am taking in.

So, what would you do if someone found that it was profitable for them to stay at that $2.00 range? And they stayed there permanently? Would you simply stop advertising? Would you shut down your shop for good?

This is what I'm having trouble understanding - I can't see the reason why you're so dependent on UP-TO-THE-MINUTE statistics. Do you have a good reason to participate in bid wars for your desired spot? Is the next lower position not as profitable? How much less profit do you make in the next lower position? Have you tried that for a week or month to see?

Oh, and how good is your CTR? Have you run tests to see which ads do generate the best CTR, AND the best conversion rate on your site?

I want to stay #1 at all costs.

Even if the cost is your business?

[edited by: bakedjake at 9:16 pm (utc) on Dec. 9, 2003]


 9:15 pm on Dec 9, 2003 (gmt 0)


No. I can be profitable in a wide range of prices. But I always seem to win out against any competitor because of CTR.

My point is: competitors come and go. They always go in the end.

But in the meantime, why can't I have the ability to control my costs while they compete against me?

I have no problem with fly-by-night competitors competing against me. They can throw as much money away as they want. I just don't want to do the same.

Being able to adjust prices proactively means managing costs. And that should make sense to every advertiser. The problem is, I can't get accurate information to manage my costs.


 9:17 pm on Dec 9, 2003 (gmt 0)


let's say I recognize a legitimate competitor. I want to be able to immediately adjust prices to co-exist, rather than sitting through weeks of higher costs before I can accurately assess a happy-medium price point.


 9:22 pm on Dec 9, 2003 (gmt 0)

No. I can be profitable in a wide range of prices.

Yes, I'm sure you can be. But you didn't answer my question: How much less profit do you make in the next lower position?


 9:27 pm on Dec 9, 2003 (gmt 0)

30-40%. That's somewhat scientific, based on my ROI analysis that has been running for a good year.

I have a theory, that I'm not sure has been put forth here before:

That is that people have become acclimatized to "sponsored listings." At this point, people know what is a straight SERP and what is an ad.

Knowing this, a higher ranking gives you more validity. Greater credibility. Think about it: a searcher knows that someone paying more is likely to be more established and more committed. More quality.

Of course, it could just be my industry. Or it could be the great unproven truth: number 1 gets more clicks, and so if you have a great site, you get more sales. Makes sense, doesn't it? The key is to have a great site.

I've tried going to number 3 before. Sure... less money, but also less clicks and less sales. I can document that.


 9:38 pm on Dec 9, 2003 (gmt 0)

Besides, you didn't answer my question.

Why can't I get real time reporting on prices if I want it?

Why do I have to say to Google, "Well, I'm willing to spend up to $2.00 per click, but you can't tell me, over the course of 24 hours, if I will be paying $0.35 or $1.90 with any degree of accuracy?"

All I'm asking for is flexability and accurate reporting of price.


 9:44 pm on Dec 9, 2003 (gmt 0)

Why can't I get real time reporting on prices if I want it?

You're right, I didn't answer this. The answer is that they do not offer this service. Think about it - would you walk into Wal-Mart and scream that they don't offer rolexes? You'd sound pretty unreasonable.

If enough of Google's customer base required your requested features, they'd provide it. But it sounds it isn't enough at this point.

If you don't like it, go somewhere else.


 9:49 pm on Dec 9, 2003 (gmt 0)

But wait...

Every other CPC company offers it. I know right now that if I change my price on Overture to position myself to pay $1.25 per click... then that is what I will pay.

Granted... a competitor could come along in a half an hour and outbid me...changing the game completely.

But then I would at least have the option of countering his bid... either higher or lower.

Again, I appreciate that Google is not a straight bid for position thing. Personally, I love that CTR makes a bigger difference. Because my website delivers.

Still... why can't they tell me: "Based on your price, and your CTR, you will pay X number of dollars right now if you make your price Y." Why do I have to go back days in history to figure that out?


 9:53 pm on Dec 9, 2003 (gmt 0)

Why do I have to go back days in history to figure that out?

I would speculate that either a) instantaneous CTR data across the network isn't available to them and/or b) they have found instantaneous CTR data to be statistically unreliable


 10:14 pm on Dec 9, 2003 (gmt 0)


Not exactly damning them for not having it. Just saying it would be helpful to a lot of us if they did... especially considering all their competitors do.

My first post said: "How long can we put up with this?"

Which, I think is valid. How much longer can we put up with Google lacking a major, constructive feature that all of their competitors have?

Especially considering it wouldn't impact the effectiveness of their business model any. It would just help us, the advertisers.


 10:15 pm on Dec 9, 2003 (gmt 0)

I'm all for real time reporting. Real time adword reporting, or even an exact lag, would be heaven for me. It seems almost random how it updates, sometimes in 15 minutes, sometimes in 3-5 hours, and it's NEVER current compiled, it's always numbers from before, but not sure how long before. At 10am it could show compiled numbers from 8am, and at 10:15am it could show the numbers from 9:30am, and then not update again till noon where it shows the numbers as of 10:45am. It's completely random, and on top of that it doesn't let us know. It should atleast say "These figures are updated as of xx:xxam/pm".

ps: I think I might be your competetor, those CPC numbers sound really familiar ;)


 11:27 pm on Dec 9, 2003 (gmt 0)

Sorry to jump in here, but I think you are missing some fundamentals of the system Google operate, and I also believe that some of your own activity is creating a higher pricing structure, let me explain.

We take on a new client, rule #1 :

Don't look for your own ads. Why? CTR = clicks/impressions you loooking for your ads fanatically = more impressions = lower CTR = higher cost.

You can't BUY a position on Google, they average things out, it's designed to make everyone's budget get spent in the course of a day.

if I have $100 daily budget limit then my ads will get shown half as many times as someone with a $200 budget all other things being equal.

Lazy advertisers will bid at silly levels, so you go to Overture and say I'll pay up to $10 a click, with auto bidding you might pay 50 cents. Along comes some keen new advertiser sees you bidding $10 and decides to bid a penny down, now you are #1 and actually bidding $10 and your option is to go #2.

This strategy can and does backfire, and it will do so on Google as well as Overture.

If all of the bid data and pricing and CTR was available then it would become a "tweaking" obsession to get all of it aligned. Advertisers would be leaving in droves.

You will never SIT at any position, every good ad gets more prominence because it makes more money for Google and more often than not the advertiser. Your competitors can't just barge in and outbid you, they can say they are prepared to pay more than you, but if all the other factors are in your favour you will win every time.

Worry about your own stuff, not what others are doing, we know everything we need to know about making a campaign work, without needing to know who we are bidding against, to us it's an intimate one to one relationship between the searcher and our clients site, and we have to try to entice the searcher in with compelling ads, which will lead to high CTR, low CPC and good profitability.


 11:37 pm on Dec 9, 2003 (gmt 0)


Question: Do we know this is true?

"You will never SIT at any position, every good ad gets more prominence because it makes more money for Google and more often than not the advertiser. Your competitors can't just barge in and outbid you, they can say they are prepared to pay more than you, but if all the other factors are in your favour you will win every time. "

How can you explain that for days and days I pay from 23 cents to 30 cents per click. But then, all of the sudden, I pay over 60 and 70 cents per click. All because someone new comes in and bids high?

Granted, eventually, it evens out, no one clicks on my competitors, and my CPC returns to normal.

But... again... my original question... why can't I have flexibility? If I identify what is going on... what can't I have the ability to adapt in real time?


 5:23 pm on Dec 10, 2003 (gmt 0)

You can adapt in real time, but the reporting of your adaption may take a little time to get to grips with.

Everything is averaged out, so for you to be seeing 60 cent clicks.... I don't buy that.

My advice (FWIW) would be to bid up to a sensible average CPC and not go in at $2, it's lazy and will get you into trouble, of the sort you seem to be experiencing.


 6:47 pm on Dec 10, 2003 (gmt 0)

Hmmm... well...

Look, all I can tell you is this...

I just logged on. The "estimated traffic" thingy said I was paying $0.34 per click. But so far today, I've ACTUALLY been paying $0.61 per click.


BTW... making the choice to UNDERbid the competition today. But I can only do so by GUESSING about my price.



 11:21 pm on Dec 10, 2003 (gmt 0)


You have to bear in mind that the estimated traffic levels and prices are based on historical data.

This is December, I don't know what line of work you are in but we have noticed that most of the sectors have higher real costs than the estimates, and the actual traffic is miles more in a lot of cases, but then it is Christmas.

At the moment this is Google Adwords 2nd Christmas. Maybe in time they will provide relevant data from the same time last year, but for now assume the unusual and you won't go far wrong.


 9:17 am on Dec 11, 2003 (gmt 0)

hmm... i'm really surprised more people aren't on brianmcc's side on this.

Lag or not, even with some stable keywords in which I more or less have the same avg. position and avg. cpc every day, if I go estimate the position, it is often very wrong. Not by just tenths, but many times by 1 or 2 full positions.

This doesn't just affect people who check stats every few hours. e.g. If you want to move up a couple slots for whatever reason, you can't trust the estimator to tell you what is going to happen or what you are going to pay, even for the very next minute after changing your bid. When I do get into the occassional bidding war and do not have the time to check stats often enough, putting faith in the estimator can cost you money. I would go as far to say the current estimator actually forces you to log in more often.

I have also noticed that sometimes when you re-estimate again with the same CPC, you sometimes get a whole new set of estimates. That can be frustrating.

...and with estimated clicks per day, I pretty much ignore it. I understand for some seasonal terms it can be off, but for example one term i have estimates 4 clicks per day and in reality I receive about 300 daily. The term has been used for decades and no way is the term _that_ seasonal. It just doesn't make any sense.

I have learned to live with the incorrect estimates and overall i can still advertise effectively. But I agree with Brian that this aspect of adwords could and probably should be vastly improved.


 9:33 am on Dec 11, 2003 (gmt 0)

dkollar, brianmcc, I am with you guys.

This reminds me of a lively discussion I had recently with a teacher in the UK where students get university places based not on what they achieve at their "A" levels but based on what their teachers predict they will get! Some people genuinely believe it's a superior system.

I could never understand why people defende guesswork over verifiable results, actual facts, and - in this case - realtime stats.

Arguments like "if you don't like it go elsewhere" are neither mature, nor helpful. There aren't a lot of options around; not the Google-size option anyway. It is always entirely up to Google to run their program how they wish. But they sometimes do take suggestions on board so let's keep this discussion going and maybe we can get a few other webmasters' comments.


 2:10 pm on Dec 11, 2003 (gmt 0)

The estimator is always going to differ from the actual cost and quantity of clicks delivered. It tells you if the impressions are out there, but there are other factors, such as the quality of your ad copy, that will massively influence the return on a keyword.

To get your ads into your desired average position it's best to look at previous day's actual figures and tweak up/down accordingly.

However, it's vital that you look at the return on your advertising when making bidding decisions. If you can't make a profit for position 3, the odds are that your rival can't either - so sit tight and let him waste his ad spend.

If you feel compelled to do something, try working on your ad copy with a view to increasing CTR. Increasing CTR causes your ad to float up the rankings without increasing bids.



 3:12 pm on Dec 11, 2003 (gmt 0)

That is that people have become acclimatized to "sponsored listings." At this point, people know what is a straight SERP and what is an ad.

For some ads (google's which listed sponsored listing very obviousally), people understand it's an ad. For others (think Yahoo), even though it's clearly listed as a sponsored listing, most people still don't know what this means.

Overture has an easier ability to run up to date stats because it's one term you're bidding on. On Google, since a keyword could actually be thousands of different searches, it's much more difficult to predict accurate reporting.

Another note, just because you're suddenly paying more doesn't mean your competitor is. What if they came in, got an amazing CTR, and really aren't bidding $2.00 a click, but much less because they managed to get a 10% CTR instead.

I think this quote from Webdiversity says a lot:
Worry about your own stuff, not what others are doing

While we feel the need to know everything that's happening, if you are the one making the changes and doing the best job, then your competition will spend their time trying to figure out what you're doing, instead of spending their time making better ads and keyword combos.

You can either spend your time making your campaign the best possible, or figuring out what you're competition is doing, and then adjust based on your competition. I'd much rather do my best and make my competition waste their time chasing me around than vice versa.

Very early in the thread there was the talk of bidding 2.00 a click while that amount wasn't actually affordable. That's why you figure out how much you can afford per bid and still make a profit, and that's your max CPC. That number can now stay the same while you get the best CTR rate possible, under these conditions, you can't lose money - and that's what it's about, making money and not losing it.

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