I have a popular keyword with a max bid of $0.96. Over 10s of 1000s of impressions, my CTR is 7.28%, my avg. position is 3.7 and my avg CPC is only $0.77.
Shouldn't Google move my ad higher, and charge me an avg CPC that is closer to my max bid of $0.96?
The only logical explanation I can think of is that my max bid of $0.96 is not enough to move my ad up, but that is a full 25% more than I'm paying at $0.77 and makes no sense.
Can someone explain this to me? Thanks!
Bare in mind that max bid is just one of the factors that “the engine” takes into calculation. Still, that same max bid is very important. Try bidding higher than your current max bid, simple as that. You will see the change.
IMHO, the algo tries to find the best 'PERFORMING' position for your ads. It also may have determined you are getting best CTR at the position it has found suitable within the limits of your CPC.
IMO the algo tests various positions when the campaign starts and then tries to stick with the best performing data.
The initial question had some kind of wondering which has no place in Google AdWords game. There is no reason to wonder about gap between what you pay and what you're are charged for.
The number of factors being calculated gives some kind of index at the end. That index, result, call it whatever you want is what determines your position.
Why you wonder about your gap of 25%?
Going back to "testing" - Google will (or is supposed to ;) ) charge you the least amount needed for your position, but at the same time, seeing 3.7 is exactly what goes against that. Why? Well, there are 10 points between each two position. That "the least" is never the same.
Go and run hourly report for one day, and then for more than that. There is no way you can say anything "firm".
There is no place for questions here, just bid higher and watch your ROI. Sometimes your 3.7 is better than 2.0 or 1.0.
The apparent discrepancy you're seeing is down to how Google calculates the ranking of ads on a page. Given a page on which ads are needed, once Google has picked the 'relevant' ads it then decides on their order. The ad at the top (no. 1 position) is the one that has the highest result from a calculation based on the max CPC multiplied by the Quality Score. This means that ads with better quality scores may actually be paying less than your max CPC and beating you to the top two spots.
When the position of your ad is decided you'll pay only what is necessary to secure that position (e.g. 77c).
There's two ways to increase your position. 1) Increase your max CPC. Plugged into the equation above this'll give you a better chance of the number 1 spot. 2) Work on your quality score. Improving your QS is really the preferred option as this stands the chance of increasing your ranking AND dropping your overall costs.
However, bear in mind that being no.1 on the ranks may not be all it's cracked up to be. You can pay a lot to get there but does it do you any good? Is the increased cost giving good ROI? I have a number of campaigns that deliberately avoid the no.1 spot (using position preference) as I'm able to deliver many more clicks for the same budget and get a better ROI.
Jon
I agree with Cobnut's advice. Test some different maximum bid prices and see what happens.
As far as quality score goes, my understanding is that Quality Score only affects your minimum bid needed to run a keyword and that Quality Score doesn't affect your bids or position.
This is not so. The Quality Score is one of THE major factors in determining your ad ranking. Have a read through this Google lesson:
[google.com...]
The animated (Breeze) version explains the ranking process visually, though if you're like me you'll want to have a glass of Scotch next to you when you view it :)
[services.google.com...]
Jon
So everything still works the same as far as auction, placement / position, quality scoring, landing page, keyword and ad relevancy, but the guesswork between bid and actual cost can be removed if you let G automatically manage it for you.
See more here:
Preferred Cost Bidding
[adwords.google.com...]
I'm only seeing the original thread and no others on WebmasterWorld:
[webmasterworld.com...]
I'm thinking of doing some testing, but I was wondering if anybody has tried this out.
If you consider an industry where you're willing to pay $3 per click; but have to bid $10 to pay that $3 - there is a $7 risk threshold you have to deal with.
In those industries, I think it's fantastic.
It's also useful if you know exactly what you're willing to pay for a keyword; and you're willing to pay it.
The biggest downside is that since it manipulates your max CPC behind the scenes, it's not compatible with position preference or advanced ad scheduling as they both need to manipulate the max CPC as well.
For me, I haven't used it - over the years I've grown very accustomed to the bid/cost spread and it's something that doesn't bother me at all. In fact, I often use the gap to sense no entries into my territory, if you will. I think the tool can reduce risks, as eWhisper said, but for me, those risks are very small and already under control.
Though I rarely use position preference, I do use advanced scheduling often, so that's another reason I don't use it.
I think preferred cost bidding was introduced to solve a perceived problem for many - from that perspective, it's a great tool. But if you felt the spread wasn't a problem for you, then it's just a feature you might ignore.
As always, test and find out what works best for your needs.
[edited by: RhinoFish at 1:01 pm (utc) on July 18, 2007]
