AdWords
1.7K members online now
1.7K members online now
Dive into advanced features like Remarketing, Flexible Bid Strategies, AdWords Editor, and AdWords Scripts
Guide Me
star_border
Reply

CPC went up, stayed up

Explorer ✭ ☆ ☆
# 1
Explorer ✭ ☆ ☆

I noticed a sharp increase in my CPC right when a new competitor entered the market and began competing with me on the same keywords. That company now appears to have stopped advertising, and I see only the other companies that were competing with me before the change. However, my CPC has remained inflated. Can I expect costs to gradually come down over time (all things being equal)? My quality scores have remained the same.

 

(I realize that every situation is different, many factors are involved, and that there could be some sneaky competitor I'm not seeing, but I'm wondering if this is a general pattern.)

1 Expert replyverified_user
1 ACCEPTED SOLUTION

Accepted Solutions
Marked as Best Answer.
Solution
Accepted by topic author fnippy
September 2015

Re: CPC went up, stayed up

[ Edited ]
Collaborator ✭ ✭ ✭
# 7
Collaborator ✭ ✭ ✭

Let's review your question : "However, my CPC has remained inflated. Can I expect costs to gradually come down over time (all things being equal)?"

 

Have you measured you avg. cpc using only the time-frame from the day since you think you got rid of that competitor ?

What is the avg. cpc for only the last 3 days for example ?

 

IF the AdRank from another competitor has not replaced the AdRank of your previous competitor, having the same value or a close one, you should expect a decrease . 

 

But if you have a MaxCPC of 1 $, a QS of 10 , and another competitor increased his MaxCPC to match your AdRank, it basically replaced your competitor in the bid scale.

 

Here are some teaching materials regarding the AdRank ( watch the video from Hal Varian , Chief Economist )

 

http://adwords.blogspot.ro/2009/03/introduction-to-ad-auction.html

 

"I am fairly certain this particular competitor has stopped advertising"

 

You can use the auction tool for a smaller time frame, in order to get updated competition results.

 

Since you said that you are competing on the same keywords, I assume you are not talking about the Display Network, where the auctions work a little different.

 

https://support.google.com/adwords/answer/2996564?hl=en

 

As to how fast you will notice a change, let me provide an example :

 

Let's say that for 20 days you were competing with a 5 $ avg. cpc, resulting in a 100 $ cost.

After that, for 10 days , your keyword brings a cost of 25 $ ( the avg. cpc 2.5$ for the last 10 days)

 

Now if you are looking at 30 days , your cost is 125 $ and the avg. cpc 125 / 30 = 4.16 (6) $$

 

That is not such a great decrease isn't it ?

 

Let say that another month goes by with a keyword cost of 30 days x 2.5 $ per day ( after your high bidding competitor has gone away), another cost of 75 $ is applied to your average.

 

If you still look at the time frame including your competitor :

 

Cost for the first 30 days 125 $ and cost for the next 30 days 75$ , total cost 200 $ for 60 days.

Average CPC for 60 days ? 200 $ / 60 = 3.33 $$ , still higher than what you would expect, since lately you know that 2.5 $ is your avg. cpc isn't it ?

 

Answer is this : the longer your competitor has forced your CPC to increase, the longer it will take to see a 90% decrease in avg. cpc that will please you IF you use a time frame including the period when your competitor was bidding.

 

Does this clarify your question ?

 

 

View solution in original post

Re: CPC went up, stayed up

Top Contributor
# 2
Top Contributor

Hi fnippy, what sort of CPC are you running?  Optimised?  Enhanced?  Manual?

 

Because of the way AdWords works you should never be paying more than 1p more than the advertiser directly beneath you.  So, if you're paid $3.51 for a click it means that someone else is paying $3.50.  If your actual CPC is the same as it has been recently, it means someone else is still competing with you.  If you're talking about your Max CPC setting, it doesn't matter as your actual CPC should have gone down.

 

How do you know this competitor has stopped advertising?  Are you running your own searches?

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits

Re: CPC went up, stayed up

Collaborator ✭ ✭ ✭
# 3
Collaborator ✭ ✭ ✭

 

Just to add a little spice to the all-inclusive menu from Jon, i would like to introduce you to the Auction Insights tool , which shows exactly who your main competitors are for a single keyword :

 

https://support.google.com/adwords/answer/2579754?hl=en

 

Just quoting 

 

"

  • Click the box next to the keyword you're interested in.
  • Click the "Keyword details" box at the top of the statistics table.     
  • In the dropdown menu, click "Auction insights (single keyword only).
  • You'll now be taken to the Auction insights report page for your selected keyword. Note: only keywords that meet a minimum threshold of activity will have the Auction insights report.

Re: CPC went up, stayed up

[ Edited ]
Explorer ✭ ☆ ☆
# 4
Explorer ✭ ☆ ☆

Thank you both. I am using manual bidding. I am fairly certain this particular competitor has stopped advertising because I have excluded a few geographic locations. Previously, when I used Ad Preview and Diagnosis to test my keywords for those areas, I'd always see that particular company's ad. Now, there are NO ads running for any of my excluded locations. It's been a week and I've checked at different times of day.

 

I have used Auction Insights, but it seems to be feeding me week-old data.

Re: CPC went up, stayed up

Collaborator ✭ ✭ ✭
# 5
Collaborator ✭ ✭ ✭

Still... are you talking about the value of the MaxCPC column price or the Avg. CPC ?

Re: CPC went up, stayed up

Explorer ✭ ☆ ☆
# 6
Explorer ✭ ☆ ☆

Average CPC.

Marked as Best Answer.
Solution
Accepted by topic author fnippy
September 2015

Re: CPC went up, stayed up

[ Edited ]
Collaborator ✭ ✭ ✭
# 7
Collaborator ✭ ✭ ✭

Let's review your question : "However, my CPC has remained inflated. Can I expect costs to gradually come down over time (all things being equal)?"

 

Have you measured you avg. cpc using only the time-frame from the day since you think you got rid of that competitor ?

What is the avg. cpc for only the last 3 days for example ?

 

IF the AdRank from another competitor has not replaced the AdRank of your previous competitor, having the same value or a close one, you should expect a decrease . 

 

But if you have a MaxCPC of 1 $, a QS of 10 , and another competitor increased his MaxCPC to match your AdRank, it basically replaced your competitor in the bid scale.

 

Here are some teaching materials regarding the AdRank ( watch the video from Hal Varian , Chief Economist )

 

http://adwords.blogspot.ro/2009/03/introduction-to-ad-auction.html

 

"I am fairly certain this particular competitor has stopped advertising"

 

You can use the auction tool for a smaller time frame, in order to get updated competition results.

 

Since you said that you are competing on the same keywords, I assume you are not talking about the Display Network, where the auctions work a little different.

 

https://support.google.com/adwords/answer/2996564?hl=en

 

As to how fast you will notice a change, let me provide an example :

 

Let's say that for 20 days you were competing with a 5 $ avg. cpc, resulting in a 100 $ cost.

After that, for 10 days , your keyword brings a cost of 25 $ ( the avg. cpc 2.5$ for the last 10 days)

 

Now if you are looking at 30 days , your cost is 125 $ and the avg. cpc 125 / 30 = 4.16 (6) $$

 

That is not such a great decrease isn't it ?

 

Let say that another month goes by with a keyword cost of 30 days x 2.5 $ per day ( after your high bidding competitor has gone away), another cost of 75 $ is applied to your average.

 

If you still look at the time frame including your competitor :

 

Cost for the first 30 days 125 $ and cost for the next 30 days 75$ , total cost 200 $ for 60 days.

Average CPC for 60 days ? 200 $ / 60 = 3.33 $$ , still higher than what you would expect, since lately you know that 2.5 $ is your avg. cpc isn't it ?

 

Answer is this : the longer your competitor has forced your CPC to increase, the longer it will take to see a 90% decrease in avg. cpc that will please you IF you use a time frame including the period when your competitor was bidding.

 

Does this clarify your question ?

 

 

Re: CPC went up, stayed up

Top Contributor
# 8
Top Contributor

Has your Quality Score gone down?  Have you made any changes to your Ads or website?

 

All things being equal, as I said, your CPC is based upon the CPC of your nearest competitor unless there are no competitors at all, in which case it's based upon your Ad Quality and other historical or related factors.

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits

Re: CPC went up, stayed up

Explorer ✭ ☆ ☆
# 9
Explorer ✭ ☆ ☆

I wanted to post a belated thank you to you both for responding. I'm still trying to puzzle out the mystery of my my CPC is so high compared to what it was a few weeks ago. I'm looking at different time frames for comparison.

 

The upshot is that my QS has not changed (still 10s across the board). My max bids are the same, and competition appears to be low to non-existent whenever I check the Ad Preview tool. Yet I'm paying much more for clicks than I ever have before. Unfortunately, this means I may have to roll back my advertising budget at Google as my ROI is plummeting.

 

 

Re: CPC went up, stayed up

[ Edited ]
Collaborator ✭ ✭ ✭
# 10
Collaborator ✭ ✭ ✭

About this "and competition appears to be low to non-existent whenever I check the Ad Preview tool." why don't you use the Auction insights to check the competition ?

 

Have you looked at other parameters that can tell you how "healthy" your campaigns are ? For example in the Dimensions tab you can look at the Daily report AND activate some columns like "Search Lost IS ( rank ) ".

 

As explained by TC Pankaj in this thread that expresses a simmilar concern to yours ( QS 10 ) , a high "Search Lost IS ( rank ) " metric is an indication of low ad quality ( meaning low response from visitors, low CTR ).

 

https://www.en.adwords-community.com/t5/Improve-results/Search-Lost-IS-IS-rank-so-high-but-QS-s-most...

 

Mr Jon Gritton ( aka. Cobnut ) also indicated this earlier.

 

Have you tried adding other texts to see how they perform ? It is not only the keyword that generates the CTR , it is the keyword + Ad combination, and that can be seen if you use the segment button in the Ads tab , and choose segment by "keyword/placement".