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Thread: Google AdWords Q: about CPC

  1. #1
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    Question Google AdWords Q: about CPC

    hi people,
    there is 1 thing I don't understand about Google's AdWords:
    you can choose what you want to pay for a click (Cost Per Click), so why shouldn't I always choose the smallest amount possible?!
    Why paying 50 if I could also pay 0.05?!

  2. #2
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    Because the higher the Max CPC, the higher the position.
    It's only one of the things they look at when trying to determine which position to place you in when someone searches on your keyword. If you have a MaxCPC of .05 and someone else has a CPC of .50 then they're going to be listed before you, pushing you down on the listings. If you have 10 people that are bidding more money per click than you then you may not even be displayed on the first two pages of search results.
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  3. #3
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    Originally posted by rsd
    Because the higher the Max CPC, the higher the position.
    It's only one of the things they look at when trying to determine which position to place you in when someone searches on your keyword. If you have a MaxCPC of .05 and someone else has a CPC of .50 then they're going to be listed before you, pushing you down on the listings. If you have 10 people that are bidding more money per click than you then you may not even be displayed on the first two pages of search results.
    well, then some of us 2 has misread their info about AdWords:
    as far as I know, CPC (and even the entire Adwords concept) doesn't influence your position in the Google results at all, or am I wrong here?!
    I think the CPC only influences your position in those 'sponsored links' on the right side...
    And to be honest, there aren't that many websites making use of it...
    Let's try this onein google: skiing >> results in 3 sponsored links >> what do I care if I am listed on top or on the bottom! I AM LISTED, that's all I am interested in.
    Can someone clarify things please?

  4. #4
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    Originally posted by Bobby_S
    as far as I know, CPC (and even the entire Adwords concept) doesn't influence your position in the Google results at all, or am I wrong here?!
    I think the CPC only influences your position in those 'sponsored links' on the right side...
    And to be honest, there aren't that many websites making use of it...
    Let's try this onein google: skiing >> results in 3 sponsored links >> what do I care if I am listed on top or on the bottom! I AM LISTED, that's all I am interested in.
    Can someone clarify things please?

    You're correct in that fact that CPC has nothing to do with your position in natural listings. But, CPC directly effects the placement of a sponsord link ad.
    There are a TON of sites using PPC - I'm actually very surprised that 'skiing' only has 3 listed on Google (it has a lot in Yahoo). Most terms will have a lot of competition so you have to bid higher just to get placed on the first page. The whole thing boils down to studies that show that the top listing gets most of the clicks (usually more than 50%). There's also another big dropoff after the 3rd listing. So, if you really want the business, it's worth a few extra cents per click to bring in 2-3 times the amount of customers.
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  5. #5
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    ic, thx!
    So this would be a great trick then:
    bid fairly high so most of the times you or above your competitors, just to teases them, other times you only bid the smallest amount, so you can compensate your high bids and while your competitor is still bidding a high amount.
    Or isn't it?

  6. #6
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    Google AdWords/CPC

    One thing I have not seen mentioned is the effect of one's click-through rate on position. Not in theory, but in reality, you can achieve a higher position than someone paying more per click than you are. Here's Google's formula:

    Max. Bid x CTR = Position

    Let's look at this:

    $.50 x 4.9% = .0245
    $.98 x 2.3% = .0225

    Guess what? At a $.50 CPC, Google rewards you for relevance (high CTR) and places your ad higher than one who pays more. The trick is to create two ads in your ad group and look at their individual CTRs. Dismantle the one with a lower CTR and write another ad that you hope will outdo the one that's already pulling the best. In doing so, you keep paying less and getting more.

    As for Overture, no such animal exists. No reward system for relevance. Google is #1 because they put the needs of their consumer first, so not only are the natural listings ranked by most relevant, so are the ads. Keep in mind that no matter what your position, if your CTR falls below 0.5% on any given keyword, they take that ad down. That's the punishment you get for not being relevant.

    Hope this info helps.

    Bruce
    Bruce Mishkin
    ReachLocal
    16 Gwizdak Court
    Sayreville, NJ 08872
    (732) 316-1144
    ReachLocal@optonline.net

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