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You probably have and so have I. So the popular wisdom says - bid the insane amounts until Google gives your ad enough "run" and decides to start bringing your actual CPCs into the realm of sanity.
So I'd like ask you guys. How common is this phenomenon? Does it take a certain amount of impressions for Google to start adjusting your actual CPCs down? Or a certain length of time?
What's been your experience? How have you handled this II phenomenon?
P.S. Hypothetical numbers example. it's impossible to achieve a positive ROI for any advertisers for keyword "pencil" with actual CPCs above $0.30 But when you try to get your nose into bidding on this keyword... a bid of $1 gets you on page 5. You find out you need to bid at least $4 to even start showing on the first page. Ok that's the setup. How you deal with it - is what I'd like to discuss here.
P.P.S. For the sake of discussion my QS on the keyword is Great or Good. So it CANNOT be used to explain the II phenomena.
What's important when you start a new AdWords campaign is that you're in it for the long term and are prepared to lose money to begin with while you sort these things out. If you're a 'day trader' you're not going to last long and will probably soon post on WebmasterWorld asking why Google hates you.
How long does it take G to adjust actual CPCs to a sane level for a new ad? In what manner, does the adjustment happen? Is it gradual or sudden? Does G need a certain number of impressions or a certain period of time to base its adjustments on?
My advice would be:
- only do this on one or two keywords at a time.
- be prepared to haemorrhage cash.
- monitor very carefully throughout the day. As your CTR history improves, you will probably want reduce your bid.
- limit costs by bidding up to position 3, rather than position 1
I do have some lovely charts on this specific process, but I'm afraid they're for my clients only. Perhaps if I speak at SES London then I'll work them into a presentation. Good luck!
If you find that for certain keywords your quality score is poor, you might be better off creating a custom landing page on your site than to burn money (and time) trying to get the CPC down.