Is there any way I can force my competitor to pay more? Or will that just cost me more too?
My understanding is that if I am paying 30 cents, they are paying 31 cents. And if I put my max bid up to $1, they will pay $1.01. Correct? What do I pay if I put my max bid up to $1? Do I pay the bid above the lowest person below me or just below the guy in #1 slot?
Thanks,
Jon
If the SERPS do not show acurate information it should be easy to rank for that term. All you have to do is be on the first page and be the fisrt site that has anything to do with that subject. SEO your site and you can get there. It is not hard.
If ONLY it could be as simple as mere SEO. lol
I have been proving to numerous people I know that G natural SERPs are useless for any intellectual research. All I have to do (in my personal life) is take them through one search for our paticular keyword and their jaw drops when they see how many obviously important and relevant sites in the keyword are simply missing from the Top 100.
Every SEO possibility over the last year has been explored to figure out why the leading never-spammed site fell out of view from Top 5 in G. It was all a waste of time and G offers no assistance whatsoever. The reality is that it comes down to merely AdWords. G natural SERPs have been purposely useless since last year, precisely for the understandable business goal of forcing sites to use AdWords. Wanna be found in G? Forget SEO because G will continue to keep you from being found no matter what you do. G makes you pay if you want to be found. And so it goes.
Some may pat themselves on the back for getting in Top 10 in natural SERPs even lately, but that does not change the fact that G has become utterly useless in natural SERPs for intellectual topics. I know some may prefer to believe otherwise and that's okay for them. I am done debating that fact.
So, we pay because G requires it for any real important site to be found.
And when an irrelevant self-publisher comes along and arrogantly thinks they belong in the first position, we "help" them pay G even more. ;)
However, I do question your false perception that you are somehow in a position to decide that another site is being 'arrogant' by wanting position one. You seem to think that you know best and that this justifies anything you might do. Questionable in two regards.
Logically, advertisers should bid what they can afford to get position, if they happen to bid too much, they will sooner or later realise their mistake.
If there is a problem, it's that most people starting out will have a poor idea of what a sensible bid is.
It is somewhat different to a "normal" auction in several ways.
I think it would be possible for "collusion" to occur without any explicit communication. Two advertisers could adopt a bidding strategy that results in CPC being lowered (over an extended period of time).
You could signal a "truce" by allowing your competitor to be #1 for a low price, and then if he does not reciprocate, "punish" him, etc.
It's a pretty complex game theory situation (co-operate/defect etc). Whether such a strategy could be held to be illegal I'm not sure.
However, I do question your false perception that you are somehow in a position to decide that another site is being 'arrogant' by wanting position one. You seem to think that you know best and that this justifies anything you might do. Questionable in two regards.
I suppose the difficulty for understanding what I am saying here is based upon not being involved in this particular keyword issue. So, I do not fault anyone for misperceptions about our ethics or our experienced perspectives. If people knew the whole matter, they'd more fully understand how I really am not being "unhumble," only talking from experienced knowledge.
Self-publishers never succeed in our topic and they always leave. Always. It's a fact of experience over and over. They fail because they are not directly involved and/or are instead only expressing their own uninformed opinions or stereotypical misinformation. The marketplace has repeatedly proven this fact: self-published books in this topic do not and will not succeed. We have just seen so many fail as they come and go. Speaking from experience does not make one arrogant, in my opinion.
Beyond that, I would instead point out the matter of "self-interest" all around. Just as this above quote implies that our organization is somehow "arrogant" to experientially know that self-publishers who are not directly involved are not really "qualified" to be in first place position, one could equally say that the self-publishers are indeed equally accusable as being "arrogant" for wanting that very first position too.
For evey finger that anyone accusingly points at our organization for our methods of protecting our "self-interest," that same finger can equally be pointed at the self-publishers for seeking their "self-interest."
The difference is, for the organization, our "self interest" motive is about protecting our very lives at stake. For the self-publishers, their "self-interest" motive is only about making a buck.
So, in the final analysis, who's really the one being "arrogant?" From my perspective, it is not the organization.
Role play: How do you know the self-publishers very lives aren't at stake? Maybe the Organization is motivated by making a buck.
You seem to gain so much pleasure in what you are doing.
This last post silly-wise assumes that I am not a human being, unable to read what the self-publisher is pushing.
I will not address any more silly attacks.
All users may choose if they want to receieve the help I gave or to not receive it. I am done with the silliness.
I do appreciate your honesty. There are probably many more doing it just not talking about it.
Being that I have suspected this very thing happening to us... I feel for the "self-publisher” and I am fighting for my livelihood.
All I have done here at WebmasterWorld is try to help someone who started this thread by showing how we deal with annoying, usless self-publishers in our particular market. The only "pleasure" I got was that I was able to offer some comprehensive help and insight for the very situation the original poster sought.
But for my lengthy efforts in posting that, I mostly receive accusations of "bad ethics," illegal collusion, questionable motives, "arrogant," being a "know it all," and my very intelligence was insulted by suggesting that I supposedly can't interpret long-term experience and obvious uselessness of what the self-publishers push in our market.
All because I donatingly gave up my time for free to help someone here at WebmasterWorld with direct help.
(I do appreciate the occasional affirmations some thoughtful posters among us here in this thread have made, though. Thanks.)
I am with compassion for people in markets where the competition is cutthroat. Yes, it is unfortunate that sometimes competition can be fierce. In those cases, I could see why someone might not like the fact that the method I described might be something being used against them. But as in the case of our organization with useless and annoying self-publishers who are going to leave soon anyway, there are also very definitely other times when this method is the very best thing for the whole market.
Just because I explained how this method works does not mean that I am anyone's enemy here. Rather, I would encourage people to get past their emotionalism and learn the method for application themselves.
Your appreciation of my "honesty" is a good step. For me, it wasn't a matter of being honest. It was a matter of helping others here at WebmasterWorld.
I hope everyone else here can begin to realize that too.
The Mathematics of CTR
in this method
In the beginning use of this method, there is a slight "disadvantage" to the organization for its being so successful. That is, by having a higher CTR than the self-publisher, it takes less of a Max bid to reach the "ceiling" and therefore end up in the first position.
Let's look at an example. For simplicity sake in the example, we'll say the organization has a long-term and well-established CTR of 4%.
The self-publisher comes in and only has a 1% CTR.
In other situations of trying to "out-bid" someone else, that means that the organization would only have to Max bid one-fourth of the neccesary Max bid needed by the self-publisher for the organization to reach the same first position. In "bidding UP wars," this makes it advantageous to the site with the better CTR, of course (i.e., the organization). That is exactly how AdWords "rewards" sites with better CTR.
But the CTR issue has an inverse effect in the application of this method of making the self-publisher pay for their first position.
If the self-publisher sets a Max bid at $1.00 with their low CTR of 1%, that makes their position factor = 1.
Self-publisher
1%CTR x $1.00MaxCPC = 1.0
For the organization to go above that 1.0 position factor, it need only set a Max bid at 26cents.
Organization
4%CTR x $0.26MaxCPC = 1.04
But in this method, the organization seeks to be directly beneath the self-publisher's ad position.
So, in order for the organization to deliberately be in second position, yet make the self-publisher pay as much as possible for being in first, the organization's "successful" CTR forces it to have to only bid 24cents.
Organization
4%CTR x $0.24MaxCPC = 0.96
So, even though the self-publisher is bidding a high $1.00 Max CPC bid, the largest amount that the organization can force the self-publisher to pay is only 25cents.
Self-publisher pays for clicks:
$0.24 + .01 = $0.25
That's how the organization's "successful" CTR becomes a seeming "disadvantage" in applying the method.
The organization can do nothing more than that.
As the self-publisher's CTR improves, though, the organization can force the self-publisher to pay more.
In a rather humorous twist, as the self-publisher stays in first position, they might very well increase their CTR. (Anything is possible :) )
As (or if) that happens, that then empowers the organization to further increase its Max bid in order to make the self-publisher pay even more.
If the self-publisher's CTR doubles to 2%, then the organization can increase its Max bid to 49cents so as to force an even higher cost to the self-publisher (50cents).
Self-publisher
2%CTR x $1.00MaxCPC = 2.0
Organization
4%CTR x $0.49MaxCPC = 1.96
Self-publisher pays for clicks:
$0.49 + .01 = $0.50
----------
If the self-publisher's CTR even goes to 3%, the organization can increase its Max bid to 74cents...
Self-publisher
3%CTR x $1.00MaxCPC = 3.0
Organization
4%CTR x $0.74MaxCPC = 2.96
Self-publisher pays for clicks:
$0.74 + .01 = $0.75
----------
If the self-publisher can even get as high as the same CTR as the organization, then the organization can force the self-publisher to pay the self-publisher's actual bid.
Self-publisher
4%CTR x $1.00MaxCPC = 4.0
Organization
4%CTR x $0.99MaxCPC = 3.96
Self-publisher pays for clicks:
$0.99 + .01 = $1.00
----------
If the self-publisher could ever get a HIGHER CTR than the organization's CTR, then the organization can always force the self-publisher to pay the self-publisher's actual bid. (They can never force it to be higher than that.) This is where it would actually become more expensive for the organization if it was otherwise trying to compete in a "bidding UP war.")
For example, if the self-publisher got a 6% CTR...
Self-publisher
6%CTR x $1.00MaxCPC = 6.0
Organization
4%CTR x $1.49MaxCPC = 5.96
Self-publisher pays for clicks:
$1.00 = their actual MaxBid because
$1.00 < the organization's $1.49Maxbid
At that point, in such (an unlikely) case, it would indeed be foolish for the organization to bid higher than $0.99. The most the self-publisher would pay is their own Max bid of $1.00.
CTR does have a limiting affect on this method
So, the truth is, while the self-publisher is brand-new, the organization is at a lesser "advantage" in the degree to which they have any power to impact the costs of the self-publisher. But as the self-publisher gains any significant amount of CTR, the more the organization can indeed force them to pay.
I would add the caveat here, this is where I do believe that it would be even "criminal" to use this knowledge in order to then start excessively clicking such a competitor's ad so as to increase their CTR. It would likely justify G terminating the AdWords account of such a perpetrator, for sure. With that caveat said, I would further warn that it is never in one's long-term interest --under any circumstances-- to deliberately INCREASE a competitor's CTR. After all, if their CTR actually surpasses one's own CTR, the only one who gets any benefit --and perhaps "competitive power"-- is that competitor. Just don't do it.
Anyway, this CTR matter will explain the other phenomenon one sees when applying this method. Namely, when the organization observes that it is able to increase its Max Bid higher and still not end up in first position, it is most likely that the self-publisher's CTR has increased. And that means that the organization can use that as an opportunity to increase its Max bid and make that self-publisher pay even more for their first position.
I hope this has been of further help for other users here at WebmasterWorld.
For example:
Self-publisher
1%CTR x $1.00MaxCPC = 1.0For the organization to go above that 1.0 position factor, it need only set a Max bid at 26cents.
Organization
4%CTR x $0.26MaxCPC = 1.04
But in this method, the organization seeks to be directly beneath the self-publisher's ad position.So, in order for the organization to deliberately be in second position, yet make the self-publisher pay as much as possible for being in first, the organization's "successful" CTR forces it to have to only bid 24cents.
Organization
4%CTR x $0.24MaxCPC = 0.96So, even though the self-publisher is bidding a high $1.00 Max CPC bid, the largest amount that the organization can force the self-publisher to pay is only 25cents.
Self-publisher pays for clicks:
$0.24 + .01 = $0.25
The ad position of the organization is 0.96 as your calculation above. It does not matter what the self-publisher bids if he want to be the first position, your ad-position of 0.96 will not change because it is based on the MAX CPC and your Max CPC does not change even you pay at lower rate.Therefore, the self-publisher has to get his ad- position higher than 0.96, say 0.97 to be at the top position. He has to bid at 0.97/1%=$0.97 while the organization will pay less as illustrated below.
If the third position (friendly publisher) has CTR of 2% and bids at $0.10. The third ad-position is 2%x 0.1 = 0.2. The Organization will pay only 0.21/4 ~$0.06
In summary:
1st position
ad-position=0.97; CTR = 1%; Max CPC = $1.0 ; pay = $0.97/click
2n position
ad-position=0.96; CTR = 4%; Max CPC = $0.24; pay = $0.06/click
3rd position
ad-position = 0.2 CTR = 2%, Max CPC & pay = $0.10/click (depending on the 4th position, pay may be lower ....)
The initial 0.96 "ad-position" factor for the organization was based on being one cent lower as needed to keep its "ad-position" factor lower than than the "ad-position" factor of the self-publisher, 1.0 (because of the self-publisher's Max CPC of $1.00 x their 1% CTR).
That is, to bid a 25cents Max CPC x the 4% CTR would have made the organization's "ad-position" factor equal the same 1.0 as that of the self-publisher. So, to be lower, the organization's Max bid had to dropped down a penny, to 24cents. And that is how the 0.96 "ad-position" factor was determined.
It looks like you might be adding that "plus one penny" increment to the non-dollar-number "ad-position" factor rather than to the highest dollar-number amount of the next-lower MaxCPC.
Am I missing something here or do I have something wrong here?
I pay max 30 cents per click on one of my keywords and I have position 2. My competitor is in position #1. Recently, I used the adwords bid estimator thingy and it said to get top spot I need to pay about $1.20.
Is there any way I can force my competitor to pay more? Or will that just cost me more too?My understanding is that if I am paying 30 cents, they are paying 31 cents. And if I put my max bid up to $1, they will pay $1.01. Correct? What do I pay if I put my max bid up to $1? Do I pay the bid above the lowest person below me or just below the guy in #1 slot?
It's late but I will try to address some of your questions anyway since no post has really answered them.
To answer I have to know two parameters which you did not mention. They are the actual cost per click and CTR. CTR is required to estimate your competitor rank number (position 1) and your actual cost per click is to calculate the rank number of position 3.
Since they are not available, I have to assume them.
Your actual cost and CTR are assumed to be $0.25 and 1%, respectively for this calculation.
position #3 rank number is about 0.25*1-0.01 ~0.24
position #1 rank number is about 1.20*1-0.01 ~1.19
your current rank number (#2) is 0.30*1=0.30
The current #1 pays:
If his CTR =1% he pays 0.31/1=$0.31 & Esimated his Max CPC=1.19/1=$1.19
If his CTR =4% he pays 0.31/4~$0.08 & Esimated his Max CPC=$1.19/4~$0.29
So your competitor pays somewhere from less than 10 cents to over 30 cents although he sets his Max. CPC from $0.3 to $1.2. To make him pay more, you should increase your rank number to 1.10 (lower than his 1.19). To get 1.1, you increase your Max. CPC to $1.1. In this case you're still in #2 position and no change in the actual cost per click ($0.25). Your competitor will pays somewhere from $0.30 to $1.1 depending on this CTR.
I do not think you should go into this game since it's too much time consumption and not worth it. Use your time to improve your ad and keywords instead.
As I study what AdWordsAdvisor explained at
[webmasterworld.com...]
then it would seem (if I am not mistaken) that I was not too far off, but the errors I made were in the calculation of the self-publisher's "actual" CPC.
According to what I think I understand AWA to have explained at the above URL, the "actual" CPC (not to be confused with MaxCPC Bid) which one pays is
the sum of
the next-lower-position ad's rank number (i.e., their CTR x MaxBidCPC)
plus .01
and then that sum is divided by
one's own CTR.
To calculate what YOU pay for "actual" CPC:
((Next-lower ad's (CTR*MaxBidCPC)) + .01) / Your Own CTR)
So, it would seem that the calculations in my examples would not be as variable as I had previously thought.
-----------------------------
Self-Publisher has 1%CTR
Self-publisher
1%CTR x $1.00MaxCPC = 1.0
Organization
4%CTR x $0.24MaxCPC = 0.96
Self-publisher pays for clicks:
(0.96 + .01)/1% = $0.97
(Previously, I had mistakely thought it was (0.24 + .01))
-----------------------------
Self-Publisher has 2%CTR
Self-publisher
2%CTR x $1.00MaxCPC = 2.0
Organization
4%CTR x $0.49MaxCPC = 1.96
Self-publisher pays for clicks:
(1.96 + .01)/2% = $0.985
(Previously, I had mistakely thought it was (0.49 + .01))
-----------------------------
Self-Publisher has 3%CTR
Self-publisher
3%CTR x $1.00MaxCPC = 3.0
Organization
4%CTR x $0.74MaxCPC = 2.96
Self-publisher pays for clicks:
(2.96 + .01)/3% = $0.99
(Previously, I had mistakely thought it was (0.74 + .01))
-----------------------------
Self-Publisher has 4%CTR
Self-publisher
4%CTR x $1.00MaxCPC = 4.0
Organization
4%CTR x $0.99MaxCPC = 3.96
Self-publisher pays for clicks:
(3.96 + .01)/4% = $0.993
(Previously, I had mistakely thought it was (0.99 + .01))
----------------
All of this is based, of course, if I have understood AWA correctly, which I might not have. I gladly welcome any further correction.
And when an irrelevant self-publisher comes along and arrogantly thinks they belong in the first position, we "help" them pay G even more.
-webwoman
In PPC competition can be divided into direct and indirect competition. Direct competitors sell a competing product; indirect competititors sell a non-competing product but bid on the same terms you do.
PPC works for some organizations, but not others. In many cases one can predict whether a PPC player will be able to make PPC work.
Therefore you have a 2x2 matrix of the competition:
------------Direct------Indirect
will work
won't work
It's prudent to have different bidding strategies for each square of the matrix.
MultiMan described a case of Indirect-Won't Work new competitor and an Indirect-Will Work existing competitor. With regard to an Indirect-Will competitor, the best bidding strategy is to avoid bidding wars, so that you can minimize your ad spend. It's not collusion.
In this case the appropriate bidding strategy is to drive the new competitor off PPC ASAP.
