Msg#: 4324932 posted 2:49 pm on Jun 11, 2011 (gmt 0)
Managing many accounts over the years, I can tell you a few things.
First, your CPC depends on this formula:
CPC = QS(b) x Bid(b) / QS(a)
where QS(b) is the QS of the ad below you, Bid(b) his bid and QS(a) your own QS.
This is the basic formula and there may be other variables but is good enough for demonstration purposes. There may be a +1 cent tacked at the end too. This formula is straight from a Google video on Youtube.
So if you do a few examples with different bids and QS, you'll quickly see that your assumption is not correct.
Second, the difference in CPC between the positions doesn't vary that much in most cases. So if you bid $1 and paying $0.75 in say 3rd position, you might pay only $0.80 in first position by increasing your bid to $2. It's not a linear correlation. Some people are afraid to increase their bids by a large percentage but it doesn't mean you'll be paying that much more to gain position.
Third, the first position gets special treatment. I think I read that years ago in Google's documents and my data supports it. In the vast majority of cases, the average CPC in first position is lower than the second. I guess the cost formula gives you a discount for being in first.
Msg#: 4324932 posted 7:18 pm on Jun 11, 2011 (gmt 0)
you'll quickly see that your assumption is not correct
you assumed that I made an assumption, my post was a question. I have often thought that an advertiser in the first spot could, under certain circumstances, be paying less per click and the next ad down but I did not know for sure.