rbacal - 7:00 pm on Aug 17, 2006 (gmt 0)

Actually, as far as I can tell, the best insurance against getting hit by the QS seems to be bidding aggressively at spot #1, regardless of cost. Bidders who insisted on being at the top rather than exploring higher return spots down the panel seem to have escaped harm....at least in my relatively small sample of observations. Anyone have info to the contrary?

No. I don't believe there will be much evidence to the contrary. I think you are correct that bid amount is a critical component (but one that interacts with the QS itself).

Once you understand the google reasoning, economically, it makes sense. Low bid ads have an "opportunity cost" to google. As such, it's in their interests to discourage those, UNLESS those ads also supply "quality" to visitors, thus improving the viablity, long term of the program and its reputation to VISITORS.

The opportunity cost refers to the idea that, from google's perspective, let's say there are eight ads for a keyword ranging in bids from .01 cent to $10.00 (that happens in some of the areas I work in).

By showing 3 low bid ads, you LOWER the probability that a visitor will click on a high bid ad. And you don't recoup that cost. By getting rid of the 3 low bids, you increase the chances that a high bid will be clicked, and even if the probability increase is small, with a large bid range, google wins (as do we on content if the same conditions hold).

Google may be willing to show lower bids IF the ads provide "value" in other ways to VISITORS -- hence the QS.

So, QS will "hit" those at the low end, AND particularly those that have junk sites.

It's ALL the things together. We tend to bid at or towards the bottom (not .01 cent but certainly below .10 cents for most terms that have a large bid range). Last I checked only ONE of our campaigns was hit, and that was just at the beginning, and it's "fixed" itself without our doing anything.

So, if you have low value sites (not just landing pages), AND you have low bids, AND if there's a range (maybe), then you're high risk to get hit again.

If you have high bids, you're probably pretty good.

If you have high value sites but low bids, it's unpredictable.