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[edited by: webpundit at 4:17 pm (utc) on Aug. 4, 2004]
Good copy is more than half the battle - relevancy is the crucial factor. Crap copy = crap ctr...
I've started a campaign on Adwords recently with lots of keywords, and many of them have been slowing, and then disabling. I've looked at the various tips for optimization that Google offers, and at bottom, it seems to me that once your ad is sufficiently well-written and targeted, the rest of it is all about CPC.
Ortelius, to boil it down to it's essence, the thing that causes keywords to be slowed or disabled is that Google users are not finding the ad that appears to be relevant to the search they did. So they don't click on the ad. This usually means that the ad is not well targeted enough, or that the keywords are not well chosen for the ad they bring up.
To be more specific, most keywords that are slowed or disabled are simply too general, and/or the advertiser is showing an ad that is only moderately related to the keywords. The keys to success here, most often, are to use keywords that are very specific to the actual product or service that you are offering, and then to show an ad about the very same thing as the keywords.
You can do this by using multiple Ad Groups to collect groups of keywords relating to the same subject together, and then writing an excellent ad about that same subject.
Google wraps it all up in fancy language a million ways to Sunday, but it seems to me that in the end it is largely about cash. By slowing and disabling keywords, Google is giving itself a way to up the ante.
I've always thought of it in a very different way: by slowing and disabling keywords, Google is making little or no money from clicks to those keywords.
And the reason we'd choose to not make any money on those lost clicks, is that we'd prefer to show ads to our users that they find relevant. So, by slowing and disabling keywords, Google is loosing money in order to motivate advertisers to create more targeted and relevant ads - as judged by our users.
BTW, Raising one's Max CPC will put an ad higher on the page but it certainly won't make a user click on it if is not relevant to the term searched. So more money doesn't necessarily buy more success. Excellent targeting usually will, however - and also allows you to pay less for the same position.
CPC is a huge factor in your ads showing up. But disablement of ads only happens when those ads have a low CTR.
At the bottom line, your Maximum CPC directly effects your position on the page, and only indirectly effects how often you ad will show (in the sense that you can get fewer $1.00 clicks out of a $5.00 daily budget, than $0.10 clicks). And yes, keywords are only disabled when they have a low CTR after 1000 impressions.