Help me understand minimum bid

[BradleyT]

I set up a new ad and my QS was great and minimum bid was $.05.

So I set $1 max CPC to see how I do -

Competitors - 10
My CTR - 7% (2 ads - 1 with mid 7% 1 with mid 6%)
My Ad Position - 5
My CPC - $.90

It's a $25 widget with a profit of $8 so yeah...huge money loser at $.90 per click.

So if I set my minimum bid to $.05 what exactly happens?

I go down to position 10?
I only pay $.05 per click?
If I stay above .5% CTR my ad stays alive?
Is there any reason I shouldn't go down to $.05?

[ogletree]

You will go down but it does not mean you will be last. You can actually pay less than somebody that bids below you. Since you have a great QS then you might not fall down that much. Depends on what they have.