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I have a companie that sells coffee equipment and cofee online. I am using PPC to promote my online sales. However I am confused by the whole PPC malarkey. Consider the following:

Rank Company Max Bid Reality1 Reality2

1 A 6.00 2.02 4.01

2 B 4.00 2.01 2.01

3 C 2.00 2.00 2.00

Now suppose I am company A. If the max bid of my nearest competing bidder was £4, would I be paying a penny above his/her max bid (reality 2 £4.01) or above what they are actually paying (reality 1 £2.01)?

Somebody please clarify this!

Also, do the rules work the same in espotting and overture?

Cheers in anticipation of your help.

M

check this out [services.google.com ]

[webmasterworld.com...] msg 11 has some in-depth bidding details.

I think this may have slightly changes since then:

Not really at odds, nyet. It is still Max CPC x CTR. The difference is that now, the CTR of the ad copy itself is factored in, instead of it being solely the CTR of the keyword. Which only makes sense, IMO, given that it is the quality of the keyword and the particular ad it brings up that defines relevance, for a given search.

From: [webmasterworld.com...] msg #110

Still trying to nail it down a bit more over here:

[webmasterworld.com...]

(forget about the RAD :))

(forget about the RAD :))

Why forget about the RAD? To some degree it is a factor.

I think what HitProf was probably getting at is that it is to no one's benefit to make up mathematical formulas, and present them as if they were fact.

It is either a mathematical factor or not. I don't know how an Algo would take non mathematical factors into account. If Ad CTR is being used for ranking then it must be a mathematical factor, thus CTR X CPC X RAD

Math has absolute precision, and when one presents a formula, it by definition can mean exactly one thing. However, no one here, including me, knows what the precise formula is.

So, in my opinion at least, it is best to not simply make formulas up. ;) I can assure you that CTR X CPC X RAD is **not** a formula under which the algo operates.

On the other hand, we **do** know that the relevance of the ad copy is factored into the algo. So this would be a far more accurate (and less confusing to others) way to say it.

Please see my recent post here for a bit more on the subject:

[webmasterworld.com...]

AWA

I guess I am

a x b x c

We know CTR and CPC are. There might be a zillion other factors. Also keep in mind they may not all be equally weighted or some might be very very small. Perhaps RAD (made-up term) might be .000000000004? Who knows. We don't know how it is defined. But we are told it exists and is a factor.

But, to be sure, if it is factored in it is in the form:

CPC x CTR x RAD (however that is defined, we won't ever know, understandably) x Maybe_other_factors_too.

I think what HitProf was probably getting at is that it is to no one's benefit to make up mathematical formulas, and present them as if they were fact.

Also, with respect (great respect), the formula is not made up. It is the definition of "factored in" which means factor x factor x factor.

CTR x CPC x RAD is just a way to express "factored in" so it can be discussed and understood.

It is important to note that RAD is not defined, but only a factor. It is precisely NOT AD-CTR. For all we know RAD = (.000000000004) x AD-CTR, or somesuch.

But I am *not* trying to mislead anyone by presenting an erroneous formula as true. The formula *is* true because it is a general formulation of precisely what a "factor" is.

yes. RAD is what ever numerical value the algo assigns to ad relevancy, based, one presumes on ad CTR. The calculation of RAD might be very complilcated indeed. Likely to involve some calculus which weights the time of placement and CTR history of the ad etc.

That is all fine and should remain top secret.

My big beef is that rank and pricing has always been (and still is [services.google.com]) represented as Word CTR X CPC.

To NYET - yes and yes and yes.

I brought this RAD children into WebmasterWorld so I planned to explain it little more, but you have written all the main ideas in this thread. Great work!

"The formula" itself says VERY VERY little about the algo itself. It may by implemented into algo by infinite number of ways. So the only fact it say is, that the CTR of ad IS really in the game. Nothing more, but nothing less.

Also, with respect (great respect), the formula is not made up. It is the definition of "factored in" which means factor x factor x factor.

That's the literal definition of "factor" in math. However, I think the word has been used in a more general sense here, meaning "has some part in the formula" rather than just the mathematical "is a multiplicand". So it could also be for example

CTR * CPC + RAD

or

(CTR * CPC) ^ RAD

Of course, constant factors might be there too, but could also just be part of the computation of RAD.

It all comes down to "some people have observed an apparent effect of ad text and some comments from Google support this idea, but we haven't the foggiest how it's really used."

Edward

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