Do you know how to measure and improve your AdWords ads? Good performing ads are achieved through split testing. You should be testing and improving your ads to increase your traffic and ROI. This articles discusses how to perform split tests, including using a chi-squared calculation to know when the test is complete.
You need to know to what headlines, call to actions and sales copy work best for your Adwords ads. You can only learn what combination of factors results in the best ad through testing. Split testing is the most common way to test your Adwords ads.
Split testing is a simple principal. You have an ad running for your website or product. This ad has an established number of impressions and clicks. But, you want to know of a different headline or sales copy will result in a higher CTR. So you create an identical ad to the original, or baseline ad. Then you change one thing, or variable about the second ad. That variable can be anything you want to test.
* A different Ad Headline
* New sales copy
* A new call to action
* Synonyms for certain words
* Use of capital letters
* Word or sentence order and structure
* The landing page
Anything you want to test can be variable. Just make sure you come up with distinct variables to test. For example, don't call a headline change and a landing page change a single variable. If you change both these items and obtain a higher CTR, you won't know if the new headline improved CTR, or if the new landing page scored a higher quality score which then improved CTR. Instead, treat these variables as two distinct variables and run a different test for each. For example, test the headline first. Then once that test is complete, test the landing page.
You now have the original baseline ad, and a new test ad. Add them both to your ad group and monitor the impressions and clicks. The trick to split testing is knowing how to compare the baseline ad with a high number of impressions (because it's been running) against a new ad with a low number of impressions. One may have a higher CTR, but how to you know if that trend will continue as the test ad gains more impressions?
A split test relies on statistics to determine when a test is complete. You can use the chi-squared calculation to determine if there is enough sample size to draw a statistically significant conclusion and declare a winner. The chi-squared calculation will return a confidence level percentage revealing how certain you can be that an observed trend will continue as impressions accumulate. For the chi-squared calculation, a percentage above 95% is considered probably significant. This is the confidence level you need to declare a winner. 99% is consider significant and 99.9% is high significant.
The chi-squared calculation and confidence level calculations are complicated formulas. Fortunately, adwords-marketing-tool,com offers a free calculator to do the work for you. The calculator is completely free and gives you a chance to enter your impressions and clicks for both ads and gives you a confidence level. If your confidence level is 95% or above, you can declare a winning ad. If below 95%, you must continue to allow both ads to run and try again when you have more impressions. The closer the CTRs of the two ads are, the more impressions it will take to reach a conclusion.
You simply check the CTR of both ads when the calculator says you reached a confidence level of 95%. The calculator will display the CTRs and the confidence level. If the baseline is the winner, discard your changes and keep the original ad. If the test ad is the winner, discard the original ad and use the test ad as your new baseline.
Continue to split test as many changes as you want. You will be improving your CTR with every test.
Are you over paying for your Adwords campaigns? Have you experienced any of the following problems using Google Adwords?
• High cost to maintain your Adwords campaign
• Poor quality score affecting your bids
• Low Click Through Rate for your ads
• Minimum bid for your keywords is too high
• Landing pages that don't convert
There is a solution to all of these problems. Slash your Adwords costs in half and get more traffic with the free Adwords Strategy Guide. Get your free copy now.
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Saturday, September 20, 2008
Thursday, September 18, 2008
Are you missing valuable data about your consumers?
Do you know what your Adwords consumers searched for? A valuable piece of information you can capture in your landing page is the keyword the user searched for. Find out what keyword your Adwords consumers used. You'll discover what keywords are bring consumers to your website. You will learn exactly what consumers are looking for when they come to your website.
Using the strategy of having one keyword per ad group should already tell you what the consumer was looking for. But, if you use phrase or exact match, you may not have the complete search term. This information is valuable, since it will tell you what term consumers use to find you ad. You'll discover what niche is bring consumers to your website. You can then use this to target other similar keywords. Plus you can alter your landing page for the search term.
The technique uses Adwords dynamic keyword insertion. Adwords assumes you have more than one keyword per ad group, and therefore can't insert one keyword out of many into the ad. Instead, Adwords uses the search term for it's dynamic keyword insertion.
That means you whenever you use the {keyword} in your ad, Adwords will replace it with the consumers search term. Using it can tell you exactly what your visitors are searching for.
You simply use this in the url for your landing page, in the form a querystring parameter. A querystring parameter is a piece of information you can pass to a url as a key-value pair. It's part of the url, but doesn't affect the path or page name. You will need server side scripting, like PHP or ASP.NET to take advantage of the technique.
For example, perhaps your landing page is [domain]/myPage.aspx. You can add the querystring like [domain]/myPage.aspx?search={keyword}. When Adwords displays your ad, it will replace the token with the search term and it will now be a parameter passed to your page.
You take the search term and add it to a database so you have a record of every search term used to reach your website. You will learn exactly what consumers are looking for when they come to your website.
Are you over paying for your Adwords campaigns? Have you experienced any of the following problems using Google Adwords?
• High cost to maintain your Adwords campaign
• Poor quality score affecting your bids
• Low Click Through Rate for your ads
• Minimum bid for your keywords is too high
• Landing pages that don't convert
There is a solution to all of these problems. Slash your Adwords costs in half and get more traffic with the free Adwords Strategy Guide. Get your free copy now.
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Using the strategy of having one keyword per ad group should already tell you what the consumer was looking for. But, if you use phrase or exact match, you may not have the complete search term. This information is valuable, since it will tell you what term consumers use to find you ad. You'll discover what niche is bring consumers to your website. You can then use this to target other similar keywords. Plus you can alter your landing page for the search term.
The technique uses Adwords dynamic keyword insertion. Adwords assumes you have more than one keyword per ad group, and therefore can't insert one keyword out of many into the ad. Instead, Adwords uses the search term for it's dynamic keyword insertion.
That means you whenever you use the {keyword} in your ad, Adwords will replace it with the consumers search term. Using it can tell you exactly what your visitors are searching for.
You simply use this in the url for your landing page, in the form a querystring parameter. A querystring parameter is a piece of information you can pass to a url as a key-value pair. It's part of the url, but doesn't affect the path or page name. You will need server side scripting, like PHP or ASP.NET to take advantage of the technique.
For example, perhaps your landing page is [domain]/myPage.aspx. You can add the querystring like [domain]/myPage.aspx?search={keyword}. When Adwords displays your ad, it will replace the token with the search term and it will now be a parameter passed to your page.
You take the search term and add it to a database so you have a record of every search term used to reach your website. You will learn exactly what consumers are looking for when they come to your website.
Are you over paying for your Adwords campaigns? Have you experienced any of the following problems using Google Adwords?
• High cost to maintain your Adwords campaign
• Poor quality score affecting your bids
• Low Click Through Rate for your ads
• Minimum bid for your keywords is too high
• Landing pages that don't convert
There is a solution to all of these problems. Slash your Adwords costs in half and get more traffic with the free Adwords Strategy Guide. Get your free copy now.
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Wednesday, September 17, 2008
Could your Adwords campaigns be damaged by impression fraud?
Click fraud is a well know type of Adwords fraud. Impression fraud is a lesser known tactic your competition could employ against your Adwords campaign.
The most obvious method of Adwords fraud is for your competitor to click your ad repeatedly. This called click fraud. The hope is that this will exhaust your daily budget and cause your ads to stop running.
Click fraud has the unintended side effect of raising your CTR. A higher CTR is a higher quality score and then a lower CPC bid. This offsets the damage, and prevents this fraud from becoming more rampant
A second type of fraud is impression fraud. Here, your competitor disables his ads and then proceeds to search for your common keywords. The attack is designed to create a large number of impressions of your ad with clicking the ad. This lowers your CTR. Your ad could have it's position lowered, or become disabled due to the lower CTR. This allows the competitor to obtain higher ad position.
There is no side effect offsetting impression fraud. However, an advertiser is not likely to turn off his ads during prime business hours. The fraudster would likely wait until the early morning hours where there is little traffic. This would make a good time for him to disable his ads and inflate the impressions on his competition. A spike in impressions during normally low traffic periods could be an indication of impression fraud.
Google is quite capable of recognizing multiple identical searches from a single computer or network. Adwords should be able to identify a large number of any impression fraud attempts. But, there may be large, sophisticated networks that could appear to be from many different sources, thus fooling Google.
Are you over paying for your Adwords campaigns? Have you experienced any of the following problems using Google Adwords?
• High cost to maintain your Adwords campaign
• Poor quality score affecting your bids
• Low Click Through Rate for your ads
• Minimum bid for your keywords is too high
• Landing pages that don't convert
There is a solution to all of these problems. Slash your Adwords costs in half and get more traffic with the free Adwords Strategy Guide. Get your free copy now.
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The most obvious method of Adwords fraud is for your competitor to click your ad repeatedly. This called click fraud. The hope is that this will exhaust your daily budget and cause your ads to stop running.
Click fraud has the unintended side effect of raising your CTR. A higher CTR is a higher quality score and then a lower CPC bid. This offsets the damage, and prevents this fraud from becoming more rampant
A second type of fraud is impression fraud. Here, your competitor disables his ads and then proceeds to search for your common keywords. The attack is designed to create a large number of impressions of your ad with clicking the ad. This lowers your CTR. Your ad could have it's position lowered, or become disabled due to the lower CTR. This allows the competitor to obtain higher ad position.
There is no side effect offsetting impression fraud. However, an advertiser is not likely to turn off his ads during prime business hours. The fraudster would likely wait until the early morning hours where there is little traffic. This would make a good time for him to disable his ads and inflate the impressions on his competition. A spike in impressions during normally low traffic periods could be an indication of impression fraud.
Google is quite capable of recognizing multiple identical searches from a single computer or network. Adwords should be able to identify a large number of any impression fraud attempts. But, there may be large, sophisticated networks that could appear to be from many different sources, thus fooling Google.
Are you over paying for your Adwords campaigns? Have you experienced any of the following problems using Google Adwords?
• High cost to maintain your Adwords campaign
• Poor quality score affecting your bids
• Low Click Through Rate for your ads
• Minimum bid for your keywords is too high
• Landing pages that don't convert
There is a solution to all of these problems. Slash your Adwords costs in half and get more traffic with the free Adwords Strategy Guide. Get your free copy now.
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Tuesday, September 16, 2008
A common mistake with Adwords could be costing you money.
A very common mistake with Google Adwords campaigns can wind up costing you money. Discover what the mistake is and why it's a problem. Learn what you can do to protect yourself.
Beginners should stay away from the Content Network in Google Adwords. When you are just starting out, disable the content network in your PPC campaigns.
Why? The content network is all the websites that belong to Google's Adsense program. While Google is trustworthy, not all of it's Adsense participants are. Some Adsense websites attempt blatant fraud. Just do a search for those who got banned from Adsense. In most all cases folks were banned for cheating Adwords advertisers by clicking ads.
Many other Adsense participants make every attempt to trick visitors into clicking your ad. Google doesn't ban Adsense participants for just being sneaky, Google really only bans fraud. But, sneaky traffic is not going to get you any return for your Adwords spending. For example, two years ago, the hot thing to do on Adsense was place a graphic over the Adsense ad. The graphic was usually in no way related to ad. But, this made the visitor believe the graphic was related to the ad. When the visitor clicked the ad, he or she wound up on your website which had nothing to do with the graphic. In most cases, the visitor is immediately left your website, wasting your money.
Many website exist where Adsense participants make ads look like navigation, attempt to blend ads with content and other tactics to confuse or trick visitors into clicking ads. Adsense publishers are always looking for the next gimmick to increase their Adsense clicks. How motivated is a consumer going to be if they were tricked to your website? The traffic generated by Adsense publishers is of low value.
A basic level content network traffic is less targeted. Google search traffic consists of a consumer actively searching for keywords. Content network traffic consists of consumer browsing other websites and stumbling across your ads.
Unfortunately, as an Adwords advertiser this is all at your expense. Now you know why the content network traffic is low quality, so go turn it off.
At intermediate and advanced levels you can use the content network. Placement targeting allows you to display ads on specific websites. If you choose respectable website, you can get good quality traffic.
You can also choose use the content network as is. Adwords allows you to separate search network bids and content network bids. When you enable the content network, enable separate bids as well. Never pay more than 10 cents a click for the content network.
Did you know that when Google separated bids for the search and content networks it ended the Adsense gold rush? Back in 2005, Google allowed Adwords advertisers to separate bids. Previously, an Adwords advertiser got only one bid for both. Highly competitive markets forced higher bids. Adsense publishers would target high payout keyword in the hopes of making a dollar or two a click. Since the change, even highly competitive keywords pay much less on the content network.
Are you over paying for your Adwords campaigns? Have you experienced any of the following problems using Google Adwords?
• High cost to maintain your Adwords campaign
• Poor quality score affecting your bids
• Low Click Through Rate for your ads
• Minimum bid for your keywords is too high
• Landing pages that don't convert
There is a solution to all of these problems. Slash your Adwords costs in half and get more traffic with the free Adwords Strategy Guide. Get your free copy now.
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Beginners should stay away from the Content Network in Google Adwords. When you are just starting out, disable the content network in your PPC campaigns.
Why? The content network is all the websites that belong to Google's Adsense program. While Google is trustworthy, not all of it's Adsense participants are. Some Adsense websites attempt blatant fraud. Just do a search for those who got banned from Adsense. In most all cases folks were banned for cheating Adwords advertisers by clicking ads.
Many other Adsense participants make every attempt to trick visitors into clicking your ad. Google doesn't ban Adsense participants for just being sneaky, Google really only bans fraud. But, sneaky traffic is not going to get you any return for your Adwords spending. For example, two years ago, the hot thing to do on Adsense was place a graphic over the Adsense ad. The graphic was usually in no way related to ad. But, this made the visitor believe the graphic was related to the ad. When the visitor clicked the ad, he or she wound up on your website which had nothing to do with the graphic. In most cases, the visitor is immediately left your website, wasting your money.
Many website exist where Adsense participants make ads look like navigation, attempt to blend ads with content and other tactics to confuse or trick visitors into clicking ads. Adsense publishers are always looking for the next gimmick to increase their Adsense clicks. How motivated is a consumer going to be if they were tricked to your website? The traffic generated by Adsense publishers is of low value.
A basic level content network traffic is less targeted. Google search traffic consists of a consumer actively searching for keywords. Content network traffic consists of consumer browsing other websites and stumbling across your ads.
Unfortunately, as an Adwords advertiser this is all at your expense. Now you know why the content network traffic is low quality, so go turn it off.
At intermediate and advanced levels you can use the content network. Placement targeting allows you to display ads on specific websites. If you choose respectable website, you can get good quality traffic.
You can also choose use the content network as is. Adwords allows you to separate search network bids and content network bids. When you enable the content network, enable separate bids as well. Never pay more than 10 cents a click for the content network.
Did you know that when Google separated bids for the search and content networks it ended the Adsense gold rush? Back in 2005, Google allowed Adwords advertisers to separate bids. Previously, an Adwords advertiser got only one bid for both. Highly competitive markets forced higher bids. Adsense publishers would target high payout keyword in the hopes of making a dollar or two a click. Since the change, even highly competitive keywords pay much less on the content network.
Are you over paying for your Adwords campaigns? Have you experienced any of the following problems using Google Adwords?
• High cost to maintain your Adwords campaign
• Poor quality score affecting your bids
• Low Click Through Rate for your ads
• Minimum bid for your keywords is too high
• Landing pages that don't convert
There is a solution to all of these problems. Slash your Adwords costs in half and get more traffic with the free Adwords Strategy Guide. Get your free copy now.
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Monday, September 15, 2008
Is Adwords click manipulation taking money from your pocket?
Adwords click manipulation could be taking money from your pocket. This type of Adwords fraud is advanced, sophisticated and quite mature. Learn what it is and what you can do about it.
Here is a wonderful description of how software exists that can click your ads and behave like a human visitor. The idea is that your competitor could use such techniques to exhaust your Adwords budget.
"(Click manipulation) technology was well developed before Google even existed. People were using it to manipulate click-through rates for banner ads, Web polls, hit counters, and other click counting services as far back as 1996."
"The more sophisticated operations use networks of servers scattered across multiple NOCs, employing software that spoofs user agents, identifies itself with multiple IP addresses across a wide variety of C-Blocks, and randomizing routines that are intended to simulate users clicking through links and spending anywhere from 3 seconds to several minutes on the pages."
"The technology was employed on the commercial side for the intentional manipulation of DirectHit results, Goto.com paid ads, affiliate programs (such as those operated by Amazon, Commission Junction, ClickBank, etc.) and large banner networks."
"Anything where someone felt they could gain an advantage, make some money, or deprive a competitive of an advantage or the ability to earn money has been targeted by click manipulators."
First, I have no doubt such software exists. But it seems that only the extreme case would become a target for such manipulation. The high level of sophisticated attack would only be worthwhile in a highly competitive and lucrative market.
Attacking mid-sized to small markets doesn't seem worth the effort. Perhaps a business model where someone attempted to sell the click manipulation technology might make it profitable. But simultaneously you can't advertise that you employ or sell such technology.
Second, click manipulation would increase your ad group or keyword CTR. A better CTR means a better quality score. A better quality score means you could lower your CPC bid. So while the prospect of exhausting competitors Adwords budget may be appealing, the knowledge that you are improving their quality score and lowering the CPC certainly offsets it.
Make sure you set a daily budget just in case.
Are you over paying for your Adwords campaigns? Have you experienced any of the following problems using Google Adwords?
• High cost to maintain your Adwords campaign
• Poor quality score affecting your bids
• Low Click Through Rate for your ads
• Minimum bid for your keywords is too high
• Landing pages that don't convert
There is a solution to all of these problems. Slash your Adwords costs in half and get more traffic with the free Adwords Strategy Guide. Get your free copy now.
.
Here is a wonderful description of how software exists that can click your ads and behave like a human visitor. The idea is that your competitor could use such techniques to exhaust your Adwords budget.
"(Click manipulation) technology was well developed before Google even existed. People were using it to manipulate click-through rates for banner ads, Web polls, hit counters, and other click counting services as far back as 1996."
"The more sophisticated operations use networks of servers scattered across multiple NOCs, employing software that spoofs user agents, identifies itself with multiple IP addresses across a wide variety of C-Blocks, and randomizing routines that are intended to simulate users clicking through links and spending anywhere from 3 seconds to several minutes on the pages."
"The technology was employed on the commercial side for the intentional manipulation of DirectHit results, Goto.com paid ads, affiliate programs (such as those operated by Amazon, Commission Junction, ClickBank, etc.) and large banner networks."
"Anything where someone felt they could gain an advantage, make some money, or deprive a competitive of an advantage or the ability to earn money has been targeted by click manipulators."
First, I have no doubt such software exists. But it seems that only the extreme case would become a target for such manipulation. The high level of sophisticated attack would only be worthwhile in a highly competitive and lucrative market.
Attacking mid-sized to small markets doesn't seem worth the effort. Perhaps a business model where someone attempted to sell the click manipulation technology might make it profitable. But simultaneously you can't advertise that you employ or sell such technology.
Second, click manipulation would increase your ad group or keyword CTR. A better CTR means a better quality score. A better quality score means you could lower your CPC bid. So while the prospect of exhausting competitors Adwords budget may be appealing, the knowledge that you are improving their quality score and lowering the CPC certainly offsets it.
Make sure you set a daily budget just in case.
Are you over paying for your Adwords campaigns? Have you experienced any of the following problems using Google Adwords?
• High cost to maintain your Adwords campaign
• Poor quality score affecting your bids
• Low Click Through Rate for your ads
• Minimum bid for your keywords is too high
• Landing pages that don't convert
There is a solution to all of these problems. Slash your Adwords costs in half and get more traffic with the free Adwords Strategy Guide. Get your free copy now.
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Sunday, September 14, 2008
Could Adwords abuse be damaging your campaigns?
Abuse of adwords will lead consumers to regard Adwords as spam or worse. This could damage your campaigns and your bottom line. Discover how Adwords is being abused.
Dynamic Keyword Insertion is encouraging poor Adwords use. Dynamic Keyword Insertion is a relatively new feature of Google Adwords. Adwords will replace the token {keyword} in your ad headline, ad text or url with the consumer's search term.
But, this has lead to Adwords abuse. An advertiser can write a single ad in a single campaign or ad group, use dynamic keyword insertion and bid on every keyword imaginable. For example, have you noticed that ads for Target.com come up for just about anything you search for? Target is a large department store and will likely carry the products in question, so they aren't technically abusing Adwords. They are guilty of running a very poor campaign. Several ads read poorly when just using a template and ad. Plus the quality scores must be awful, unless Target.com has such a high CTR.
There are several websites abusing Adwords much worse. Many of these sites are just Adsense Arbitrage websites. That means they hope to pay very little for Google ads, and then display nothing but Adsense ads and hope to have an ROI. These websites have no content at all, and only display Adsense ads.
* all the automotive.com
* all the information.com
* best3websites.com
* ToSeekA.com
* seekful.com
Again, it is easy to assume the quality score should be low for sites with no content. You must assume that these websites are paying top dollars for clicks. Either that or the CTR is so high the relevance isn't a factor. Perhaps the keywords are such niche keywords that even a poor quality score has a low cost.
The main questions are will this weaken Adwords in the eyes of the normal consumer. Consumers that click on ads taking them websites with no content may become sick of ads and refuse to click any ad in the future.
Second, will Google do anything about it? As long as the Adsense arbitrage advertiser continues to pay, Google will remain happy. Plus Google also takes a percentage of the Adsense payment too. Thus there is incentive for Adwords to continue to support these poor quality websites.
Are you over paying for your Adwords campaigns? Have you experienced any of the following problems using Google Adwords?
• High cost to maintain your Adwords campaign
• Poor quality score affecting your bids
• Low Click Through Rate for your ads
• Minimum bid for your keywords is too high
• Landing pages that don't convert
There is a solution to all of these problems. Slash your Adwords costs in half and get more traffic with the free Adwords Strategy Guide. Get your free copy now.
.
Dynamic Keyword Insertion is encouraging poor Adwords use. Dynamic Keyword Insertion is a relatively new feature of Google Adwords. Adwords will replace the token {keyword} in your ad headline, ad text or url with the consumer's search term.
But, this has lead to Adwords abuse. An advertiser can write a single ad in a single campaign or ad group, use dynamic keyword insertion and bid on every keyword imaginable. For example, have you noticed that ads for Target.com come up for just about anything you search for? Target is a large department store and will likely carry the products in question, so they aren't technically abusing Adwords. They are guilty of running a very poor campaign. Several ads read poorly when just using a template and ad. Plus the quality scores must be awful, unless Target.com has such a high CTR.
There are several websites abusing Adwords much worse. Many of these sites are just Adsense Arbitrage websites. That means they hope to pay very little for Google ads, and then display nothing but Adsense ads and hope to have an ROI. These websites have no content at all, and only display Adsense ads.
* all the automotive.com
* all the information.com
* best3websites.com
* ToSeekA.com
* seekful.com
Again, it is easy to assume the quality score should be low for sites with no content. You must assume that these websites are paying top dollars for clicks. Either that or the CTR is so high the relevance isn't a factor. Perhaps the keywords are such niche keywords that even a poor quality score has a low cost.
The main questions are will this weaken Adwords in the eyes of the normal consumer. Consumers that click on ads taking them websites with no content may become sick of ads and refuse to click any ad in the future.
Second, will Google do anything about it? As long as the Adsense arbitrage advertiser continues to pay, Google will remain happy. Plus Google also takes a percentage of the Adsense payment too. Thus there is incentive for Adwords to continue to support these poor quality websites.
Are you over paying for your Adwords campaigns? Have you experienced any of the following problems using Google Adwords?
• High cost to maintain your Adwords campaign
• Poor quality score affecting your bids
• Low Click Through Rate for your ads
• Minimum bid for your keywords is too high
• Landing pages that don't convert
There is a solution to all of these problems. Slash your Adwords costs in half and get more traffic with the free Adwords Strategy Guide. Get your free copy now.
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Saturday, September 13, 2008
Actual versus Maximum CPC
What is the difference between the actual CPC and the maximum CPC per bid? Knowing the answer can help corner that top position on Adwords and explode your traffic.
Every Adwords advertisers knows what the maximum CPC bid is. This is price you give Adwords as the absolute most you're willing to pay for a click.
The actual CPC is what you pay. These two numbers are almost never them same. You will almost always pay less in the actual CPC. The actual CPC is the cost to raise your ad above the next advertiser, based in part on your quality score.
For example, let's say your maximum CPC bid of $0.25 would get you the 3rd ad position. Adwords will charge you just what it costs to beat the 4th ad. This could be $0.10, $0.20 or the full $0.25.
This is known as a Vickrey Auction.
Another important point is that prior to 2007 Adwords based your ads position on the combination of the actual CPC and quality score. Since 2007, Google changed to base the position on the maximum CPC bid and the quality score.
The quality score component of this formula is closely related to your CTR. The better a CTR/ quality score, the cheaper it is for you to achieve top positions. For example, an ad with a 2% CTR and $0.25 max CPC bid is the same as an ad with a 1% CTR and a max $0.50 bid. If both bid $0.50, the ad with higher CTR wins.
You can use this to your advantage. You can set your maximum CPC bid much higher than you really want to pay. You know that the actual cost will be less. Plus, you can be assured of a higher ad position because Google will base the ad position on this inflated maximum CPC.
You could theoretically bid $100 per click. This would guarantee you the top ad position, because Google will base the ad position on the high bid. You would know that your actual CPC would be nowhere near $100, but instead just enough to beat out the second ad. A keyword with no competition would cost $0.05 or $0.10 assuming you had a good quality score.
Assuming you have a good CTR rate of 1% or better, it would impossible for any other advertiser to take the top position from you. Since google bases the top position on the maximum CPC, and you are at $100 per click with a good quality score and CTR, you would be unbeatable.
But there are some risks with inflating the maximum CPC. A competing advertiser could increase is maximum CPC. You would still have the top position, but it would more expensive to beat the number 2 ad. It's quite possible for the actual CPC to go beyond your budget or comfort level. You would need to be very vigilant to make sure you do not cross this threshold.
Are you over paying for your Adwords campaigns? Have you experienced any of the following problems using Google Adwords?
• High cost to maintain your Adwords campaign
• Poor quality score affecting your bids
• Low Click Through Rate for your ads
• Minimum bid for your keywords is too high
• Landing pages that don't convert
There is a solution to all of these problems. Slash your Adwords costs in half and get more traffic with the free Adwords Strategy Guide. Get your free copy now.
.
Every Adwords advertisers knows what the maximum CPC bid is. This is price you give Adwords as the absolute most you're willing to pay for a click.
The actual CPC is what you pay. These two numbers are almost never them same. You will almost always pay less in the actual CPC. The actual CPC is the cost to raise your ad above the next advertiser, based in part on your quality score.
For example, let's say your maximum CPC bid of $0.25 would get you the 3rd ad position. Adwords will charge you just what it costs to beat the 4th ad. This could be $0.10, $0.20 or the full $0.25.
This is known as a Vickrey Auction.
Another important point is that prior to 2007 Adwords based your ads position on the combination of the actual CPC and quality score. Since 2007, Google changed to base the position on the maximum CPC bid and the quality score.
The quality score component of this formula is closely related to your CTR. The better a CTR/ quality score, the cheaper it is for you to achieve top positions. For example, an ad with a 2% CTR and $0.25 max CPC bid is the same as an ad with a 1% CTR and a max $0.50 bid. If both bid $0.50, the ad with higher CTR wins.
You can use this to your advantage. You can set your maximum CPC bid much higher than you really want to pay. You know that the actual cost will be less. Plus, you can be assured of a higher ad position because Google will base the ad position on this inflated maximum CPC.
You could theoretically bid $100 per click. This would guarantee you the top ad position, because Google will base the ad position on the high bid. You would know that your actual CPC would be nowhere near $100, but instead just enough to beat out the second ad. A keyword with no competition would cost $0.05 or $0.10 assuming you had a good quality score.
Assuming you have a good CTR rate of 1% or better, it would impossible for any other advertiser to take the top position from you. Since google bases the top position on the maximum CPC, and you are at $100 per click with a good quality score and CTR, you would be unbeatable.
But there are some risks with inflating the maximum CPC. A competing advertiser could increase is maximum CPC. You would still have the top position, but it would more expensive to beat the number 2 ad. It's quite possible for the actual CPC to go beyond your budget or comfort level. You would need to be very vigilant to make sure you do not cross this threshold.
Are you over paying for your Adwords campaigns? Have you experienced any of the following problems using Google Adwords?
• High cost to maintain your Adwords campaign
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