Baffled by Adwords

Does anyone really understand their bid/ranking system?

[mhkatz]

Someone please explain this:

Keyword: [widget]
Maximum cost-per-click: $0.15 (my choice)
Average Cost per click: $0.05
Average Position 2.5

I set my Maximum to 15 cents, so why doesn't Adwords hit me for the full amount and increase my position?

Keyword: [widgets]

Maximum cost-per-click: $0.32 (Minimum required by Adwords)
Average Cost per click: $0.32
Average Position 1.4

Why does Adwords require a minimum that puts me at the 1.4 position for this particular keyword?

These are just two examples of how I cannot make sense of the whole bidding/ranking system. Can anyone point me to a clear and understandable explanation of their system?

[Mike_Mackin]

[adwords.google.com...]

It is not a "market driven" bidding system at this time.

[SlyOldDog]

The system is very clever. It looks as if it's designed to give everyone a go at the top spot through rotation, but Google's real motive is simple:

Revenue = price per click * clicks

The guy who produces the highest revenue for Google gets the top spot most of the time.

Why not all the time? Well, maybe the guy below has an ad that potentially will provide more revenue for google. So they put it in top spot one time in 3 and see if it earns them more. It it does, he will be promoted to be there more of the time.

If you are the unlucky one who just dropped back, fear not. you can still go to the top by bidding more so you give google the best revenue again. In some ways it's more vicious than Overture because you don't know exactly what to bid to wipe out your competition, so bids can go up much faster.

[webguybri]

Google adwords program is much worse than overture. We had been using adwords for over a year. But we steadly saw our average cost per click go from .20 to well over .38 cpc and were spending over $10,000 a month.

The problem is they force you to make your maximum cost per click on terms .50 or higher even though nobody else is bidding on them!

On overture you can bid .05 for the same term. Its not an advertiser based system at all. We cut our whole program. It wasnt worth it...and guess what our sales didnt CHANGE.

[docdanger47]

I think you everyone is so worried about Adword bidding and you have the budget, just switch to Premium Sponorship so you can be at top all the time for your pacticular keywords.

[siiix]

i just leave it at 5 cect it still get hits once in a whyle

i found key words i,m banned and there is only 1 person paying, if noone pays those HUGE prices they will go down

[WebManager]

webguybri

Like you, I'd like to hear from people who use adwords and actually get a ROI - I can't seem to, it makes no difference to sales.

[chaitan]

> Google adwords program is much worse than overture.

Adwords is working much much better than overture for me.
I get average 800 visitors everyday thru a popular keyword, which will cost me $0.50-$0.90 in overture at the first 20 spots. Thanks my Lord Google, the great Adwords system make me pay only $0.06 cpc, average pos 2.x. Best of all, I break even for the campaign + favicon.ico + return users.

[SlyOldDog]

I think Google has made a bit of a pig's ear of the way they set adwords rates.

Overture is definately the benchmark. It's a dog-eat-dog free market, and you can bet your bottom dollar the top bids there are pretty close to what the market will bear.

Google, starting out from zero has had to guess what some keywords are worth rather than wait for people to bid them up to competitive rates (heaven forbid that people should pay below the market price!)

This has lead to some opportunities and in our case some real rip-offs which nobody is prepared to pay. Google had their chance to download overture's top bids, but I guess they didn't bother. Now Overture has taken the bid information out of the public domain. There's a (multi) million dollar mistake by Google if ever I saw one!

So I guess we should enjoy the adwords niches while they last. Nothing lasts for ever, especially on Google!