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]