Why no ads on first page?

[aristotle]

I just atarted using adwords about two months ago after they sent me a $100 coupon, so I don't have much experience with it. Now I've encountered something that I don't understand, and would like to ask about it here.

The site that I'm advertising is strictly non-commercial and produces no revenue of any kind. It is about a subject that doesn't get much traffic, and has no commercial value. For these reasons there's hardly any competition for the keywords I'm using. (Note: there's a site called <snip> that sometimes has ads for some of my keywords, but if you click one of its ads, it takes you to what looks like a parked page full of links. I don't understand what this site is doing, but at any rate it seems to be my only competitor, and only for some keywords)

My question arises because about two weeks ago the impressions and clicks for my best keyword took a big drop. At about the same time, I saw the following notation for that keyword in my Adwords dashboard:

"Below first page bid. First page bid estimate: $0.61"

Since my bid is $0.12, it is far below the first page bid estimate of $0.61. So that explains why the impressions and clicks for that keyword took a big drop.

BUT HERE'S THE THING: If I do a Google search for that keyword, there are no ads at all on the first page of the results! But if I then go to the second page, my ad nearly always appears, and is nearly always the only ad on that page.

Here are my conclusions:
1. I am nearly always the only bidder for that keyword.

2. But even when I'm the only bidder, my bid isn't high enough to get my ad onto the first page.

3. The Adwords system has somehow created a minimum bid of $0.61 for getting onto the first page for that keyword.

4. By creating this minimum first page bid, Adwords has lost most of the revenue from that keyword. In other words, Adwords is making less profit than it otherwise would.

When I started, I thought Adwords was a true auction without any artificial preset minimum bids. But apparently I misunderstood.

Anyway, my basic question is this: why is Adwords setting this minimum first-page bid for this keyword? Since it's costing them money, I don't understand why they're doing it. Can someone please explain?

[edited by: buckworks at 10:25 pm (utc) on Jan 4, 2015]
[edit reason] Removed specifics. [/edit]

[lammert]

The site that I'm advertising is strictly non-commercial and produces no revenue of any kind. It is about a subject that doesn't get much traffic, and has no commercial value.

Given that there is not much traffic and the subject isn't commercial, AdWords may not have enough data to calculate an accurate price and starts with pricing based on what they find is comparable data. Starting your campaign and let the algorithm gather data would then be the only way to get the pricing in a more reasonable range. But that only works if you are prepared to burn some money.

Commercially speaking it shouldn't matter for you if you pay $0.61 for a visitor coming from a SERP where you are the only advertiser, or if that visitor was coming from a page full of competitors. What should matter is the cost vs. value of that particular visitor and the average ROI on the visitor (which is probably not much with a strictly non-commercial site)

You may also want to look in the wording of your ad, landing page and the specific keywords you are targeting, because those are all factors which can influence pricing.

[aristotle]

lammert -- Thanks for your reply.

Commercially speaking it shouldn't matter for you if you pay $0.61 for a visitor coming from a SERP where you are the only advertiser, or if that visitor was coming from a page full of competitors.

I'm not sure what you mean by that statement, but I would have to be really dumb to increase my bid to $0.61. In fact hell will freeze over before I increase it at all. At my current bid of $0.12, I can get at least 5 times as many visitors for the same expenditure as I would at a bid of $0.61. I won't get visitors as quickly, but I'll get them eventually. Since I'm still gradually adding more content to this site, visitors that come later will see a more fully developed site anyway, so I don't mind waiting at all.

Starting your campaign and let the algorithm gather data would then be the only way to get the pricing in a more reasonable range.

Actually, when I first started the campaign, my ad was on the first page of the results, even though the initial quality score for this keyword was only 5/10. Since then the quality score has increased to 8/10, but now the ad is no longer on the first page.

You may also want to look in the wording of your ad

I don't think the ad is the problem. The overall CTR for the whole campaign is currently 1.12%, which I think is fairly decent. Also, many of the visitors are exploring the site, reading multiple articles and making repeat visits.

But here are the main things that I still don't understand:

1. Why doesn't Google show any ads at all on the first page of the results for this keyword?

2. Since there are no other bidders, where did the estimated first page bid of $0.61 come from?

3. By not showing my ad on the first page, Adwords is giving up potential income from ad clicks, and therefore making less profit from this keyword than they could. Why are they giving up this income?

Thanks again

[buckworks]

5 times as many visitors for the same expenditure as I would at a bid of $0.61

Not necessarily. If the CTR is strong, the actual click cost is usually less than the bid cost. Sometimes a lot less.

I agree that it seems nonsensical for AdWords not to show ads when there's only one bidder. Nonetheless I'd encourage you to boost the bid for a test period and see what happens.

Hell isn't frozen over where I live but everything else is! ;)

[aristotle]

Thanks buckworks
I'll start thinking about raising my bid, but only temporarily as a test. But as I mentioned, I'm not in any hurry to spend this money.

Yes I knew that a bid is a maximum, and that you are often charged less.

Anyway, I'm still wondering where that $0.61 number came from.

[micklearn]

Anyway, I'm still wondering where that $0.61 number came from.

Not really a helpful reply...but I've often wondered similar things.

[Khensu]

Two words.

Illusion & Greed.

To a newbie it looks like they will have to bid 61 cents.

I have $2 bids for a client that they say $5 for first page. I pay $1 per click and it reads as position 3. Last time I looked position 3 was on the first page. Dang, I want to delete that column so bad and I can't do it. It's all lies and intimidation to dupe the uneducated user.

[digidarts]

There are many things behind the suggested bid and your bid, suggested bid is a minimum bid to showing ads on first page so keep your bid high and when you got good quality score then you can decrease your bids.

[aristotle]

Does anyone have an answer to the question in the title of this thread?

[Planet13]

I think they just don't care...

If they think that the keyword MIGHT have some commercial potential, and all the bids are low, then they are going to make you (and other advertisers) bleed a little more before you get your ad on the front page.

they probably figure they can hold out longer NOT getting the revenue from clicks that would otherwise be on the first page then you can hold out NOT getting the customers that would otherwise come from being listed on the first page.

My guess is they believe you are going to blink first...

[aristotle]

Planet13
Thanks -- That seems like a good explanation, and it's what I've been thinking too.

But I had the impressioon from the Adwords Help information that it was an auction process. So if, as in this case, I'm the only bidder, then my ad would be the winner and therefore be shown. Instead, it looks suspiciously like the Adwords system is programmed to do what you said.

But in my situation I can wait a very long time. maybe not til hell freezes over, but at least until it gets its first frost.

[Shepherd]

It would be interesting to see what your actual CPC turns out to be if you do bid the first page bid requirement (.61). If a true auction, and there truly is no competition your CPC should be .10 (is the minimum still .10?).

[aristotle]

If a true auction

But how can it be a true auction if no ads are shown?

[Shepherd]

In a perfect world, the auction would come in to play when determining your CPC. Just because there is a minimum required bid to be shown on the first page does not mean that your actual CPC will be as high as the minimum required bid.

[eWhisper]

Google tries very hard to maintain a balance of a free product (Google organic listings, knowledge graph, etc) with paid listings.

Their goal is to show more informational & free results if the query has a low commercial intent. Essentially, if the user is not going to find what they are looking for in ads; then Google would rather just not show any ads for that query. It makes those SERPs look clean and helps users find their desired info.

If Google finds a query is highly commercial and is often looking for a product, transaction, etc instead of a free resource (i.e. a forum, blog post, articles, etc) then they will show a lot more ads on the page.

Of course, there are lots of flavors in the middle where you'll see only 1-3 ads, other times its none, other times its 12.

When Google doesn't feel that a query is great for commercial purposes (AdWords); they raise the first page minimum bid as well. In the past (years ago) they just wouldn't show your ad regardless of what you wanted to do; so at least now, if you really feel you want to be on the page; then you can pay the minimum to force your way in front of users. Now, if you get there and can maintain a great CTR and user experience, then you will often see that price go down significantly.

What Google has found that if they show less ads overall, their overall ad CTR actually goes up. They had a period in 2013 where every quarter they showed less ads than the previous quarter and yet their revenues still rose. Google is very good at not just looking at the revenue from any one search; instead, they try to look at the overall revenue when they make changes like this.

This is why you might see high first page minimums or your ads on page 2 (a page 2 user is different than a page 1 user). FYI to a previous question - average position is average when ads are shown. So if no ads are shown on page 1 and your ad is always position 1 page 2; your average position in adwords will be 1.

So this is actually more of a philosophical idea from Google as opposed to a straight technical AdWords question.

Hope that helps.

[aristotle]

eWhisper --
Thanks evry much for your explanation. I don't remember seeing anything about this aspect of it in the Adwords Help and Guidelines.

[aristotle]

P.S. -- After thinking about this some more, I believe that Planet13's description of this as an Adwords scheme to try to force advertisers to increase their bids still has some validity.

Also: What I said earlier about Google losing potential revenue and profits by not showing my ad on page 1 is still true. Maybe their expeximents with fewer ads have worked in some cases, but it doesn't work in this particular case.

[aristotle]

I've been thinking some more about Google's experiments with fewer ads. What might have happened is that the advertisers who got knocked off the first page could have increased their bids to try to regain their old positions. This would drive up the overall minmum bid to get on the first page and raise the average cpc. So the increased revenue in the experiments might not have had anything to do with "cleaner results" at all, but instead was caused by the competition of advertisers fighting for fewer ad slots.

If you restrict supply, but demand remains the same, then the price will rise.