Welcome to WebmasterWorld Guest from 54.226.246.160

Forum Moderators: buckworks & eWhisper & skibum

Message Too Old, No Replies

AdWords Maximum CPC Question

Does this price directly affect your position?

     

brucec

6:41 pm on Apr 17, 2004 (gmt 0)

10+ Year Member



I am new to Ad Words and just starting an ad campaign and Google suggested to use $4.79 CPC. Does this mean that if I pay 4.79 daily, I will be the highest position?

RossWal

7:16 pm on Apr 17, 2004 (gmt 0)

10+ Year Member



Bruce,
No, that's the most you are will to pay per click. Next you need to put a cap on what you're willing to spend per day.

I think!

buckworks

8:39 pm on Apr 17, 2004 (gmt 0)

WebmasterWorld Administrator buckworks is a WebmasterWorld Top Contributor of All Time 10+ Year Member



Ignore that 4.79 suggestion and do your own math to decide how much you're willing to pay per click.

Blue Gravity

10:46 pm on Apr 17, 2004 (gmt 0)

10+ Year Member



Bruce,

Unless that term will bring you in a considerable amount of traffic and extremely high conversions, do not accept AdWords' "suggested PPC" price. If you really want that term, and it's very competitive try to weigh in two options:

1. Always subtract the final daily CPC to 1/2 of what AdWords recommends.

2. The better your CTR (regardless of what your bid price is) the higher your ad goes up on the AdWords system for only about a penny more per click.

nyet

10:40 am on Apr 19, 2004 (gmt 0)

10+ Year Member



2. The better your CTR (regardless of what your bid price is) the higher your ad goes up on the AdWords system for only about a penny more per click.

not true. on both counts. Google ranks the ads on how much money they will make not just CTR. So If you have a CTR of 5% and a CPC of $.05 but only get an average of 10 clicks per day you will generate $.50 per day. But if someone else has a CTR of 1% (2 clicks a day) , CPC of $2.00 they will generate $4/day. THEY will be above you!

Also, Lets say your CTR is the same as the ad below you, to be above them you must pay .01 higher than their *max cpc* NOT their cpc!

[edited by: nyet at 11:29 am (utc) on April 19, 2004]

edit_g

10:46 am on Apr 19, 2004 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



Also - remember that the AdWords suggested CPC is a bit, er, eratic (by eractic I mean: wrong, most of the time).

Google will also rank your ad by CTR.

nyet

11:19 am on Apr 19, 2004 (gmt 0)

10+ Year Member



Google will also rank your ad by CTR.
multiplied by CPC!

eWhisper

5:12 pm on Apr 19, 2004 (gmt 0)

WebmasterWorld Administrator ewhisper is a WebmasterWorld Top Contributor of All Time 10+ Year Member



The definitive post by AWA about the rank formula:

[webmasterworld.com...] Post 11.

AdWordsAdvisor

5:28 pm on Apr 19, 2004 (gmt 0)

WebmasterWorld Senior Member adwordsadvisor is a WebmasterWorld Top Contributor of All Time 10+ Year Member



Also - remember that the AdWords suggested CPC is a bit, er, eratic (by eractic I mean: wrong, most of the time).

Sometimes true, I can't deny it. ;) Please remember, though, that the suggested CPC that you are given as you create your keyword list is an estimate prepared in a moment in time - in a system in which things are changing many times per second.

What I recommend is that you set your Max CPC at a level no higher than you are comfortable with, then monitor your actual results for a day or more - and make adjustments accordingly.

...Google ranks the ads on how much money they will make not just CTR. So If you have a CTR of 5% and a CPC of $.05 but only get an average of 10 clicks per day you will generate $.50 per day. But if someone else has a CTR of 1% (2 clicks a day) , CPC of $2.00 they will generate $4/day. THEY will be above you!

Just a few words about position - I'll make it as brief as possible:

* Your position is figured by comparing your rank number to your competitor's rank number, with the highest rank number appearing higher on the page.

* Rank number = Maximum CPC x CTR

So in nyets example above, what will happen?

Advertiser 1 has Max CPC of 0.05 and CTR of 5%, so 0.05 x 5 = Rank number of .25

Advertiser 2 has Max CPC of 2.00 and CTR of 1%, so 2.00 x 1 = Rank Number of 2

Therefore, in the instant that the above search takes place, Advertiser 2 appears above advertiser 1.

It is worth noting that by the time the next search of the same keyword takes place, the CTR of both keywords may well have changed - and Max CPC may have as well.

AWA

<added> Got called away halfway through writing my response, came back and finished it, posted it and only then saw that eWhisper had sort of beat me to the punch. Story of my life. :) </added>

mcguffin

6:23 pm on Apr 21, 2004 (gmt 0)

10+ Year Member



AWA,

I've been thinking about this calculation, and I've read this post here and the one ewhisper refers to in msg #8.

How does this calculation work when you're showing more than one ad per keyphrase?

Let's say that you've got three ads showing in rotation for the same keyphrase.

You have said that:

* Rank number = Maximum CPC x CTR

We know that AdWords tracks the individual CTR for each ad and displays those statistics.

  • Do the calculations for Rank number or CPC change if you have multiple ads in rotation for that keyphrase? If so, how?
  • Do the calculations change whether you've chosen to rotate ads equally or based on CTR popularity?
  • Do the calculations use the average CTR of all ads or does the calculation rely on which ad will be shown next?

I hope these questions make sense, but if not, please feel free to ask me to try to clarify. I'm not trying to invoke calculus, and I'm certainly not trying to melt your brain.

I'd appreciate any answers you can offer. Thanks!

AdWordsAdvisor

12:54 am on Apr 22, 2004 (gmt 0)

WebmasterWorld Senior Member adwordsadvisor is a WebmasterWorld Top Contributor of All Time 10+ Year Member



How does this calculation work when you're showing more than one ad per keyphrase?

Good question, mcguffin.

So far in this thread, I've been working under the (hopefully correct!) assumption that we were talking about the CTR of keywords - which is the CTR that controls ad position, and keyword 'health' as shown in the 'Status' column of an Ad Groups stats.

Really, the Max CPC x CTR calculation pertains only to keywords, and is entirely separate from the CTR of the Ad itself. In other words, it is not the CTR of the Ad that partly determines position, but he CTR of the keyword itself, in the moment in which it was searched.

The reason the CTR of the ad (or ads) is shown, is that it gives advertiser's a relative measure by which to judge the success of different ad headlines/copy.

Hope that make sense.

I'm not trying to invoke calculus, and I'm certainly not trying to melt your brain.

Whew! Thankfully no calculus was involved. Advanced math was not, uhhm, my best subject.

No brain cells were harmed in the creation of this response. ;)

AWA

mcguffin

1:34 am on Apr 22, 2004 (gmt 0)

10+ Year Member



AWA,

Thanks for such a quick and clear answer!

I'll admit that math wasn't my strongest subject either, and I was really glad the answer didn't require calculus to explain.

skibum

2:16 am on Apr 22, 2004 (gmt 0)

WebmasterWorld Administrator skibum is a WebmasterWorld Top Contributor of All Time 10+ Year Member



So what it all boils down to is the ad that generates the highest CPM gets ranked highest, or most revenue for Google per impression?

edit_g

2:37 am on Apr 22, 2004 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



So what it all boils down to is the ad that generates the highest CPM gets ranked highest, or most revenue for Google per impression?

Did you think it would be different? ;)

eWhisper

12:21 pm on Apr 22, 2004 (gmt 0)

WebmasterWorld Administrator ewhisper is a WebmasterWorld Top Contributor of All Time 10+ Year Member



So what it all boils down to is the ad that generates the highest CPM gets ranked highest, or most revenue for Google per impression?

I just double checked an account to make sure this wasn't right.

My ads with the highest CTR (and in most cases its not the highest average CPC ad) are the ones shown the most often with Ad Optimizing enabled.

I'm pretty sure ad optimization works off of highest CTR and thats the only factor involved. If there's another factor that makes an ad shown more often, I'd like to hear what it is.

andrewg

6:25 pm on Apr 22, 2004 (gmt 0)

10+ Year Member



AWA, seriously, you guys should think about dropping that bogus max bid suggestion that gets served up to new advertisers. That $4.79 example is typical.

Maybe Google should consider making that something like 50 cents. There really are newbies out there bidding $4.79 and Google knows full well that this kind of ignorance can stretch for months -- the reason being sometimes people are pulled in different directions so they cannot monitor their own campaigns carefully... and aren't fully aware of what $4.79 even means. If the thingy suggests $4.79 they just assume that's a fair price for something-or-other. In some cases the newbie might vastly underestimate the actual number of clicks required. They're looking more at the dollars, perhaps, so they set a low daily budget with a high per-click cost and get poor performance. The classic rookie mistakes.

This leads to bizarre bidding wars until of course their trusty agent (me) gives them a good talking-to and we get them into a decent range.

Whenever I talk with the folks in my office about that suggested max bid trick, they just shake their heads. It's seen as evil. I suppose only a small percentage of new advertisers are thrown by it, but shouldn't this process be as transparent as possible?

Best,

Andrew

 

Featured Threads

Hot Threads This Week

Hot Threads This Month