Friday, May 23, 2008

Your Default CPC Bid

Your default CPC bid is the maximum amount you are willing to pay for a single click through from your ad to your landing page.

There are several different philosophies about how to set this number. Before I get to that, please notice the second box which is an alternate Content Bid.

Your ad can be shown on two separate search networks. The first is just Search. This means when a person goes to Google and enters a search, your ad will show. This is absolutely where you want to be.

The second is Content. Content is the Google AdSense ads that display on many pages. Google looks at the page and tries to understand what the page is about. This is where the name Content comes from - they are based on the "content" of the page on which they are displayed. Then, with the page owners active participation, Google shows AdSense ads – the same as Sponsored Links – on the page.

My problem with content ads is my experience has been they have dramatically lower click through rates.

Now you may find you get your best sales results from content ads instead of Search ads. You will learn this by tracking results. (More on that later)

The important thing here is that you may want to set a different bid for content or you may want to disable content ads completely.

If you do not enter a separate bid amount for Content Ads here, the other CPC bid will be used.

If you do not go to your Campaign Management Tab and turn off Content Ads, they will be displayed.

Now back to how to set you CPC bid.

AdWords is an auction. You bid on the ad. If your bid is the highest, generally, you get to be the #1 result for that specific search. Each individual search is its very own real time auction. You can change your bids at anytime if you do not like you position.

Usually the CPC bid is higher than your actual average cost per click. The auction works like this…

• Your bid is the most you will pay
• This sets the price for the position above you
• The position below you sets your price

Bid Cost Example
• You bid $1.51
• Competitor “A” bids $10.88
• Competitor “B” bids $0.65

• “A” pays $1.52 – one penny more than your maximum CPC bid
• You pay $0.66 – one penny more than “B’s” maximum CPC bid
• “B” pays $0.05 or $0.10 – the minimum bid

If you go ahead and enter a CPC bid amount, Google will help you estimate the total daily cost and number of click throughs you can expect. This is a very useful guide. I have found it to be a high estimate on the average position my ad would run and low on the average number of daily click throughs – and therefore low on the daily cost. Neither by much, but some.

I use bids that do not end in 0 or 5. Instead of bidding $1.00 I will bid $1.03. I figure that most people bid in 5 cent increments so if I am slightly over I will win the bid.

What position do you want to buy? Two things to consider. The first is that the #1 position will get more click throughs. The second is that content ads and ads on other networks like AOL only display the first 4 results.

Google Search shows the first 8 results. So if you are result #5 you will not show on content often.

Some articles I have read make an argument for the 8th position being more valuable than the 5, 6 or 7 position. This is the idea that more people skip to the end than read the middle. This is probably true, but I always want to be #1, so I have never tested this.

I would always suggest you bid for the #1 spot. If it pays a profit to get people to your site, you want to get as many as fast as possible.

1 comment:

Jay said...

super helpful and good tip on upping it a couple cents to beat the typical bidder. an old ebay trick!