For months I have set my max CPC at 5 cents and have been happy with the placement of my ads and their CTR. Now with the recent changes I have been forced to get rid of several keywords (google wanted double the price to keep them active) but with the remaining keywords I am seeing my ads getting average CPC of 2-4 cents. Clearly I would like to spend as little money as possible and keep my standing where I am in the ad results. I fear if I make my max CPC 3 cents, google deactivate my keywords until I pay up to 10 cents. Should I keep it at 5 cents max and hope for the 3 cent clicks, or switch to 3 cents max and get almost 3 clicks for what I was paying for 2 before.
Below 0.05 many of my keywords were set to inactive within 24 hours after they had been accepted and active. This makes it a lot of work to maintain the lowest possible max bid on a large number of keywords.
Try the Budget Optimizer; it does seem to auto-adjust for the lowest CPC that will get the ad shown if possible. My average CPC has roughly halved since the changes came in. I do allow a much higher max CPC than that to get my foot in the door and give the optimi[sz]er some leeway.