Budget Optimizer and Affiliates

What effect does the budget optimizer have?

[migriffin]

I've been following the budget optimizer thread closely, but I'm intrigued by how the budget optimizer will treat the CPC when multiple people are bidding on the same keyword for the same domain. It seems to have skyrocketed my bids thus far and will further cause an overvaluation of keyword prices.

Should we expect that this automated solution will cause pseudo bidding wars with an efficiency that will quickly cause keyword prices to rise? I'm very nervous about this new tool and suspect that my ROI will spiral downward if either I or a single one of my competitors decides to use it.

[migriffin]

Well, the good news is that this tool doesn't actually seem to take affiliate bidding wars into account. I think it assumes numbers based purely on the estimator, which also doesn't take the new affiliate rules into account.

The bad news is that this bid optimizer doesn't seem to work at all. How can I set my max CPC for a keyword to be $10 with a $10,000 monthly limit and have the automated program drop my bid from $0.30 to $0.05 and also drop me off the charts? In other words, I allowed it free reign to increase my CPC and it simply dropped my CPC until my ad no longer showed. And to clarify...no other ad for the same URL shows up either.