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How does Google price its ads on a per click basis?

Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

I have started a campaign and added 10 keywords which are all associated with my main keyword. Many of my keywords have search pages with Zero ads on them. I would naturally assume that a page with no ads on it means there is no competition for that keywords search. Based on logic a lack of ads means that the page has no competition for ads on that keyword, so I could put 0.01 as a click price and get front page all day long, yet I never see my ad there (using incognito mode). Can someone explain why this is happening. The Adwords analytics confirm that I have gotten a few clicks at 0.10/click so I know it is up  there. How can this happen?

I would seem based on this test that Google is fixing the prices based on factors other than a competitive pricing model. Can someone explain?

thanks

K

Re: How does Google price its ads on a per click basis?

Participant ✭ ✭ ☆
# 2
Participant ✭ ✭ ☆
Hi Krik,

Welcome to adwords community.
1.As I assume that your keywords bids are very low so your ads are not running. It may be the reason. You need to check your ads are running or not. As you said that your adwords analytics confirm few click. so just hover mouse over the speech bubble in keywords tab and see the status, your ads are running or not and change it according to them.

2. Price Competitive Model - Actual Cost per Click
Google combine the components of Quality Score (expected clickthrough rate, ad relevance, and landing page experience), the max. CPC bid, and the expected impact of extensions and other ad formats to determine Ad Rank. When estimating the expected impact of extensions and ad formats, google consider such factors as the relevance, expected clickthrough rates, and the prominence of the extensions or formats on the search results page. Ad Rank is then used to determine where the ad appears and what types of extensions and other ad formats will show with the ad (or whether the ad or ad format will appear at all).

For ads on the Search Network, the minimum Ad Rank required for ads above search results is generally greater than the minimum Ad Rank required for ads beside search results. As a result, the actual CPC when you appear above search results could be higher than the actual CPC if you appear beside search results, even if no other advertisers are immediately below you. Although you may pay more per click, top ads usually have higher clickthrough rates and may allow you to show certain ad extensions and other features available only in top ad positions. As always, you’re never charged more than your max. CPC. bid.
Examples

If the advertiser immediately below you bids US$2.00, and if that advertiser's ad is the same quality as yours (and has equal-performing extensions and ad formats), you'd typically need to bid a penny more than US$2.00 to rank higher than that advertiser and still maintain your position and ad formats. With AdWords, that's the most you'll pay (about US$2.01), whether your bid is US$3.00, US$5.00, or more.
If the advertiser immediately below you bids US$2.00 and has a higher quality ad than you, you'll pay about a penny more than what's required to match that advertiser's higher Ad Rank (and still maintain your position and ad formats), but never more than your max. CPC bid (unless you’re setting bid adjustments or using Enhanced CPC).

Hope it helps you.

Re: How does Google price its ads on a per click basis?

Visitor ✭ ✭ ✭
# 3
Visitor ✭ ✭ ✭
that is all very helpful information to understand. Thank you.
However my question is a bit more specific. Assuming the ad ranks 5 on the 1-10 scale of relevance and there are literally zero ads on the page, why would I not have an ad show up. There is zero competition. It would seem as if Google has a min bid that they require to see an ad on the page.
Do they have a required amount of ads before they put any up?
thanks

Re: How does Google price its ads on a per click basis?

Participant ✭ ✭ ☆
# 4
Participant ✭ ✭ ☆
Hi Krik,

If your ads position is 5 and you are saying in this keywords there is zero competition. this can not be possible.
1.I would suggest you to hover mouse over the speech bubble in keywords tab and check your ads preview tools then you can find the competitor.
2. Click on campaign and find your auction insight report.The Auction insights report lets you compare your performance with other advertisers who are participating in the same auctions that you are.
For more go with this link https://support.google.com/adwords/answer/2579754?hl=en

Google does not required any amount for ads. If you will get click then amount will automatically deducted from your adwords balance. Its totally depend on your bid(Maximum cost per click) which you want to pay for one click.
Marked as Best Answer.
Solution
Accepted by topic author Kirk C
September 2015

Re: How does Google price its ads on a per click basis?

Badged Google Partner
# 5
Badged Google Partner
Kirk,

@ahmed Ali did a great job of explaining this phenomenon in another post. I will copy his answer here for you:


There's a common misconception: Many advertisers believe that if they have no competitors for a keyword, their minimum cost-per-click (CPC) will automatically be lowered by the AdWords system to $0.01, the lowest possible CPC.

How it actually works: The minimum CPC for a keyword is not related to the number of competitors one has that keyword. Instead, minimum CPC is dependent on the Quality Score of the keyword, as it's used in the advertiser's account. Google has a minimum threshold you need to meet in order your ads be able to show.

If you look for your ad and see no competitors, this does not necessarily mean that there are no others advertising on that keyword. For example, many advertisers choose to show their ads only during particular times of the day, so you will not necessarily see them when your ad appears. Or, while you might be targeting the entire United States, competing advertisers may be regionally targeting and not including the area in which you are located -- in which case you'll not see their ads.

Read more:- http://adwords.blogspot.ae/2007/10/common-misconception-revisited.html
Ahmed Ali

Re: How does Google price its ads on a per click basis?

Visitor ✭ ✭ ✭
# 6
Visitor ✭ ✭ ✭
what is the minimum quality score in order to show up on a search? 2, 4,6 ,8? is the score based on the website keyword density? or some similar metric?

Re: How does Google price its ads on a per click basis?

Visitor ✭ ✭ ✭
# 7
Visitor ✭ ✭ ✭

I would like to follow up on my own post. First, I would like to thank everyone for commenting. These were all helpful answers and gave me a better understanding of the process.

However I think I answered my own question.  Here are the important points.

 

1) my concern was that the only thing preventing my ad from showing up on my search term was price. This was proved to be true by raising my minimum price.

2) There are zero ads on my search term, so price should not be the determining factor. I upped the min price and then my ad showed up. Therefore, the ads spaces do have a "google minimum price" before they allow them up there. This is an artifcal price floor.

3) I did not change a thing other than min price and the ads popped up. I want to reiterate that there are no other ads in my space, so it is not competitive pricing for an ad spot.

4) this shows it had nothing to do with my ad, its relevance to the keyword, nor the landing page.

---> Google has an artificial price floor for accepting ads on their search page.

* someone please explain where my logic in wrong. I would like to understand this better.

Re: How does Google price its ads on a per click basis?

Visitor ✭ ✭ ✭
# 8
Visitor ✭ ✭ ✭
I confirmed it. google has a minimum price for certain pages even if there is no competition. I guess they do price fix for their ads