Welcome to WebmasterWorld Guest from 184.108.40.206
You may have a minimum bid of 0.05 and bid that for your #3 position. Another advertiser can have minimum bid of 0.20 and bid that amount of 0.20. If we take that your minimum bid is worth more that his, you’ll stay on your #3 and he will take #4. Than he bids 0.30 and all changes.
Please note that bidding 0.30 on minimum bid of 0.20 does not tell how much you will be charged. The only thing you know is that the CPC will be anywhere between your minimum bid and max bid, that is, 0.20-0.30
We have keywords with minimum bid of below 0.10, and yet, have to bid over $1 to keep our positions #2 and #3.
Simply, don’t worry too much about it, especially in regards of keywords that are “crowded” by other advertisers. In cases where first page has not been filled in, you may want to experiment.
On other side, the lower your minimum bid is, more confident you should be that your landing page (or site) is doing fine with Google AdWords (at least at that moment ;) Some people have seen their minimum bids imitating f-15 in its 90 degrees diving – but the other way – that is – skyrocketing).