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Few questions related to lowering the Max CPC

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# 1
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Hello,

I have few questions related to lowering the Max CPC.
 
Here is how I understand the bidding rank:  Max bid x QS = Ad Rank

Now, if Quality score of my ad is higher than the QS of the ad below me, I can bid less than the ad below me, and still be on the higher rank.
As my Actual CPC is determined by my max CPC, QS and the CPC of the bidder below me, I should be able to lower my Max CPC and maintain the same Actual CPC.
 
In my understanding, lowering the Max CPC should not lower the Actual CPC. (Despite this, Lowering Max CPC is a standard practice for most AdWords professionals).

Yet lately studying my AdWords reports it seems to me that I got reverse affect - lowering the Max CPC seems to be raising CPC. Can someone tell me why is that?
 
Also, lowering Max CPC should not negatively affect our ad rank.
 
Any answer will be appreciated.  Thanks in advance.

 

Imre

 

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Re: Few questions related to lowering the Max CPC

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# 2
Top Contributor

Hi

 

I will try to help.

 

You must remember that you have no idea what the advertiser below you is bidding, or how frequently they change their own max cpc.

 

Yet lately studying my AdWords reports it seems to me that I got reverse affect - lowering the Max CPC seems to be raising CPC. Can someone tell me why is that?

That will only happen when for a period of time your max CPC has been FAR more than your actual CPC paid. For example: Max CPC £5.00, Avg CPC £1.40. When this happens (a big gap between actual and max) I believe you lost control over your actual ad rank, and as such you have no idea whether you could be paying less for the same position. I try to keep the two variables as close togehter as possible so that if I make a change, I will notice a small cause and effect.

 

It could also make sense that if you lower Max CPC, the actual CPC increases. This is because sometimes (not always) if you lower your max CPC, your ad rank will be lower and you will get a lower CTR in position 5 than in position 3. If that happens your quality score will decrease, so in order to compensate for your ad rank the actual CPC must increase. OR a competitor advertiser has changed their bid which affects your actual CPC.

 

Also, lowering Max CPC should not negatively affect our ad rank.

Interesting statement. About six years ago, there was no such thing as quality score or ad rank and it was all about how much you can afford, and the highest CPC won. Now we have ad rank that considers the quality and

relevance of an ad, and not just how much you can afford to pay. So it would be interesting to see how you anticipate an auction can run if there is no financial bidding in it at all, but I think it has come a long way positively from where it was.

 

And then sometimes I think we can all just be guilty of over thinking the whole thing. I know that Google tell us how ad rank works - but no-one really knows. It's a system we all just second guess and hope to benefit from.

 

Good luck.

Jack Porter-Smith
Jack's G+