Questions about CPC and bidding

[budbiss]

I have some questions about CPC and bidding:

a) I bid $4.00 per click for a particular broad match keyword. I was charged $2.84 per click for the actual click throughs. Why was I charged $2.84? How did Google arrive at this amount? Did Google charge me a few pennies more than the price that the top paying competitor is paying? Is there a way I can view what my competitors are paying?

b) What would happen if I changed the CPC bid to $2.00? I assume one thing that would happen is that my ad would be placed at a lower position; is this true? What else would (or could) happen?

c) How can I determine what the lowest I can bid would be while still having my ad diplayed?

I have searched my brains through the archives and the library, but I am unable to locate any answers to these questions. Thanks for your help guys!

[poster_boy]

a.) From AdWords help: "With keyword-targeted ad campaigns, you choose the maximum cost-per-click (Max CPC) you are willing to pay. The AdWords Discounter automatically reduces this amount so that the actual CPC you are charged is just one cent more than the minimum necessary to keep your position on the page." <-- It's saying it takes your Max CPC and other factors into account (relevancy, CTR, landing page score, etc.) to determine where you should be ranked at that price.

No, you cannot see what competitors are bidding - and it wouldn't be very insightful even if you did... there's quite a bit more that's factored into price and postion than Max CPC alone.

b.) You must experiment to find out... sometimes your actual CPC or position will be dramatically impacted... other times it will barely be.

c.) Again, experiement... test various bids and gague the position it nets you and at what price.

Good luck!

[budbiss]

Another question:

At this time, I am only authorized to do a maximum $15/day for the budget. The person in charge wants to be position 1-2, thus requiring us to bid $3/click with ends up translating to 5 clicks per day. Is it even worth it? Should I try to convince the person in charge to allow for a higher budget? Or, is 5 click throughs per day better then none?

[poster_boy]

I'm not sure anyone here can answer that - it depends on what your client is looking to accomplish. IMHO, that traffic level simply isn't enough to gain a meaningful number of conversions or learnings - and requiring top positions while implementing such restrictions is a flawed strategy.

I sure hope you're being compensated on a flat fee basis.

[eWhisper]

This post, [webmasterworld.com...] has a great explanation by AWA that walks through the bidding process.

It's probably the best place to start in understanding the difference between max CPC and actual CPC.