How can Adwords be profitable for a webmaster?

too expensive, raising prices for keywords...

[sore66]

At 10 cents a click, "if" the Adwords traffic performs as good as my other traffic, then I make money.

At 20 cents a click I make none.

I'm just starting with Adwords and when I log back in to campaign management (after the first few thousand clicks come in), some of my active keywords have been raised from 10 to 20 cents (or more).

You know what Mr Google (if you are out there), you should let new customers see if the system works before you start raising the price of your ad space.

It's just ad space. I'm not paying more than 10 cents a click. If anyone wants to give me advice on how to play the game so I only pay 10 cents or less, I'll listen.

BUT I WONT ACTIVIATE THESE HIGHER PRICES!

[jtara]

Google doesn't raise the prices.

Your competition does.

[66sore]

Good theory, but some of those words have no competition.

I don't think people with organic #1s are sitting there gaming adwords. Or am I naive?

[HStiepel]

Naive? Don't know.
But: there are people who run adwords campaign in addition to good organic search results.

One of our campaigns is an example of that. We score regular top 3 SERPS results AND also try to get top 3 AdWords on the same (and several others offcourse) keywords.

First of all: one of our own ads takes away a place where a competitor could be.
Second: 1 plus 1 doesnt necesarilly equal 2 in situations like this I think. Customers seeing your name more than once are I think more likely to click either one. I don't believe you will get the same amount of traffic divided between the 2 sources.

[bigtoga]

That's great for companies with products that cost hundreds/thousands of dollars but, if he makes money at $0.10PC and doesn't make money at $0.20, I don't think he's selling high-dollar items.

I too have noticed Google forcing you to pay $0.20 for a particular keyword despite the fact that no one else is even listed in the AdWords...

[netmeg]

That's because your site has to prove its worth and relevance by way of CTR first. Then your minimum click price goes down. At least, that's the way I understand it.

[jtara]

I don't think people with organic #1s are sitting there gaming adwords. Or am I naive?

I am an affiliate of a company who is usually the #1 organic search result for products that it sells.

Why do people click on my ads? Because the ad is more clear and easier to read than the organic search result. And it allows me to deliver exactly the message I want to. It is, simply put, more attractive to the user than the organic search result.

Companies who are #1 in organic search result - whether selling a product or not - can benefit for the same reasons.

The other factor is that you are displacing a potential competitor from an ad slot. So, you'd best get the #1 ad slot. I think you will find this is the case with most top organic search results from leading companies.

Search on "adwords" to see what I mean. Google walks the walk. :)

[netmeg]

I don't think people with organic #1s are sitting there gaming adwords.

One of my clients has top 5 and in most cases, #1 or #2 organic results for almost every kind of sporting equipment they sell - and they still want me to keep them in the top three in AdWords as well. It's a brand/exposure thing.

[sore66]

I think google just randomly picks words to see if we'll go higher. If there's any algorithm, I think it's in google having figured out what percentage of webmasters will bid higher. I won't so my average for this campaign remains very close to .10 cents/click.

still ok at 10 cents
0.3% CTR, position 3
1.6% CTR, position 1
2.6% CTR, position 8
3.1% CTR, position 6

stopped and forced to bid higher (20 cents or more)
0.3% CTR, position 2
1.4% CTR, position 1
1.7% CTR, position 2
2.9% CTR, position 7