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Who sets the bid initially?

Follower ✭ ☆ ☆
# 1
Follower ✭ ☆ ☆

Hello All,

 

If I am bidding for keyword like 'NCERT books' and no other advertiser is bidding.

 

As seen through Ads preview tool and selected India as a geograpahic location. No one is bidding on the above keyword.

 

We sat a bid of Rs.4 initially and check the ad preview but its not showing.

 

We increased the bid till our ad started showing.

 

At Rs.15 Max CPC it started showing our Ad.

 

So, my question is why we can't bid low and started our ad to show?

 

Who sets this bid for each vertical/keywords/geographies.

 

Looking forward to hear great replies.

 

Thanks

 

2 Expert replyverified_user

Re: Who sets the bid initially?

[ Edited ]
Top Contributor
# 2
Top Contributor

Hi Rohan,

 

Google puts a minimum threshold for bids in place. An advertiser bidding for a keyword needs to bid above this to take part in the auction, no matter how many advertisers are there in the auction.

 

There must be some kind of statistical calculation behind it, but Google does not disclose this.

 

 Thanks
Ratan Jha


About Me: Community Profile | Ratan Jha INC.
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Re: Who sets the bid initially?

Top Contributor
# 3
Top Contributor

It has been a long time since the minimum bid for a keyword was 1 cent....

I think that there is no keyword  in any language that hasn't taken part in an auction, hence there is a threshold for any keyword to be shown. (I think that the threshold ids for the ad-rank, not necessarily for the bid)

Moshe, AdWords Top Contributor , Twitter | Linkedin | Community Profile | Ad-Globe
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Re: Who sets the bid initially?

Explorer ✭ ✭ ☆
# 4
Explorer ✭ ✭ ☆

Hi Rohan,

 

Great question indeed. Yes there is no competition for the keyword NCERT Books. Well Google has a minimum threshold of bids which are to be maintained. Getting bids lower than Rs.15 is quite possible. I have ran a few accounts who have CPC bids lower than Rs. 10. But it cannot happen on the first day. It takes time. Let the account build some history and also some data.

I am attaching an image for your reference. This is a recent account and I was managing a competitive financial services client.

example 1.png

When I started this account we were paying about Rs.38 and slowly we bought down spend by working on the keywords, negatives and the landing page.

In Feb we are again on a good Rs. 15 price.

 

But Rohan remeber one thing. CPC Bids are not important. Your final conversion matters a lot. Look at that aspect. Are you converting? Many people run behind improving quality scores, decreasing bids and improving CTR. But they loose the main objective  - Earning out of Adwords.

 

Bids depend on Quality Score. They are inversely proportional to each other in mathematical terms. Higher the quality score - lower the bid and lower the quality score - higher the bid. Now find out what is your quality score? It always doesnt depend upon the competition. Google has a bid and quality score threshold for keywords throughout industries.

Again what kind of keywords you are bidding on? If those keywords have a lower quality score assigned by Google then it would lead to higher bids at the start. As you improve quality scores, it would definitely improve over time.

 

Hope this helps!