Google is getting away with predicting how much you should bid on a keyword/phrase, rather than having you entering a competition. The word algorithm sounds so good. Even Copperfield wouldn't be able to do much about it.
For them, it seems to be good being able to "force" advertisers spend amounts they've predicted for each of their Qs.
Figure out what you can afford to bid per click, given your normal conversion rates and margins. Enter that bid, and let the system do with it whatever it will. Sometimes you'll get exposure, sometimes you won't.
Above all, don't let the system's whining about first-page bids suck you into paying more than your conversion rates can sustain. Bid what makes sense for your numbers, not Google's.
I seen this several times. I start with the low bid, and I get a quality score of 3, and it claims no ads are being displayed. In a day or so the Quality score goes to 6-8, and the ad is displayed. If it is a niche category, google has very little data on the keyword, and eventually creates some valid statistics; based on your results.
The other option is to bid higher and get the ads to display right away. If you have a quality ad, your Quality score will shoot up; and even if you are bidding high, what you are actually charged is much lower, since you have no competition on the keyword.
You can then lower your bid, until it is enough to show on the top left, instead of in the right column.
In my experience, when you have keywords that get little to no search volume, it seems like Google will make you pay more for them even if there aren't any other ads.
This is to prevent you from running tens of thousands of such keywords in your account (keeping your keyword portfolio smaller and thus requiring less hardware resources from Google for you to manage it).
Not saying it's right, just that this is what I've seen on a number of different accounts.
The reason for the below first page bid message is simple. The system does not take into account that there is no ads at your location. It looks at ALL the advertisers for the keyword, everywhere in the world that ever used this keyword, whether they are advertising or not at this time. It then looks at your QS and calculates the minimum bid to be on the first page.
If there really are no or few competitors, ignore the message. Your ads should show with a reasonable bid. But remember that just because you don't see ads, doesn't mean they don't exist somewhere.
I have been an AdWords advertiser since the very early days (first month?) and have had tremendous success over the years for our B&B business.
Unfortunately due to political problems the tourism in our market has plummeted.
Due to fewer searches overall for our area it has become imperative to advertise under more general keywords in order to have any volume of impressions & reach what market there is.
Unfortunately AW is now asking stupidly high prices for a market where most of the advertisers have disappeared.
I finally bit the bullet & reduced all my bids to a comfortable level. My keyword list is now almost 100% under first page bid. The funny thing is I continue to get clicks but at a price that is 20% of what I was previously paying.
This obviously will not work in all situations however if AW is asking high prices that are uncomfortable for you for 1st page ignore them. Put an amount that you feel comfortable with. Make sure that you have "partners" selected as many times the bid levels are lower or have fewer advertisers.
Also consider content ads. Just bid a low amount.
Warning. I check every day "See search terms" under keywords & "Automatic placements" under Networks. Use your negative keywords for "search terms" that don't apply & eliminate content sites that don't have potential for your business.
Over time if you do this on a regular basis you will find that your searches are more directed & your ROI higher.
What is happening here is that there is an auction going on in the background that Google doesn't tell you about and doesn't show ads for.
Google has a set amount of money that it wants to make per keyword and has the ability to show ads against pretty much and keyword (thanks for broad match) but it is about the users propensity to click.
What Google's algorithm is doing is working out how much money it is receiving per click and then how many advertisers are in the space and the propensity to show different numbers of ads in each auction to maxamise potential revenue. Thats why you dont always see 10 ads in each result.
They also have a certain amount of 'ad hygiene' where they wont show all irrelevant ads because users would complain and it goes against their religion. But these irrelevant ads still are there behind the scenes pushing up the minimum bid price. Google also needs to learn how each keyword will perform to work out how many ads to show in order to maxamise its revenue.
So depending upon the broad match ads in the background and the element of ad hygiene and Google's historic performance on that keyword, depends on how much the minimum bid is for a particular keyword.
Let's start with your last paragraph. Maybe nitpicking here but it's not a minimum bid but a first page bid. You can bid lower than that FPB and you may in fact appear on the first page, although maybe not 100% of the time or in 100% of the places.
You are right of course that all those factors help to determine the FPB. It depends on how many advertisers there are, active or not, and their bids as well as your QS.
Speaking of QS, it's your ad hygiene concept you use. I like that. I don't believe the system would ever show only irrelevant ads. The QS concept takes care of that by itself which also takes care of maximizing Google's revenues. Of course, the more ads you are exposed to, the more chance you'll run into irrelevant ads, at the very least, lesser quality ads.
Yep, these lesser quality ads are still there to be used. They potentially push up the FPB calculation.
I don't think they would purposely limit the number of ads shown. I can't think of a reason to do this except to not show poor quality ads. But it's rare to not see the full slate of ads on a page. They have enough inventory at any given time. And QS would make sure the low quality ones are at the bottom of the page if the inventory is reduced.
My biggest objection is your statement of an "auction going on in the background". Are you suggesting that sometimes my ads are subject to the "regular" auction and other times there's a different kind going on?