How do ad groups/campaigns compete with each other?
I've heard it many times that you shouldn't have multiple ad groups (or campaigns) target the same "ad impression". Otherwise, they would compete with each other and inflate your own bids.
So let's take display network for example.
I have an ad group that uses display keywords as the targeting method.
Then another ad group that has placements as the targeting method.
Then another ad group that has affinity audiences as the targeting method.
Let's imagine there is some visitor on some website, that happens to be among my targeted placements. And the page that visitor is on matches my display keywords' theme (either by context match or by extended match), and the visitor is determined to be a member of the audience that is being targeted.
So all three ad groups would be a match to be eligible for the auction for the ad impression to that visitor at that time.
What happens then?
Let's say I use target CPA bidding in all three ad groups. And the bid is the same for all of them.
Would such setup inflate my effective bid?
I read somewhere that AdWords runs an internal auction in the account, then picks the winning ad from the winning ad group, and then uses that for the external auction among other advertisers.
So on the one hand, the internal auction simply picks the best, so this is a good thing for me. But on the other hand, I keep thinking that I'm missing something, and that by having multiple ad groups compete with each other, I really do inflate my own effective bids.
Is there a consensus about this?
Re: How do ad groups/campaigns compete with each other?
Hi @bcc1357 a single Account never actually "competes with itself" in any situation so the idea that this inflates your bids is completely wrong.
Where one or more AdWords element can match against a user action (a search, a view of a page, etc.) AdWords will decide which element is the best to match that action, and it does so without any "bidding" process internally. The actual rules for which element will win vary from type to type, but you can read about how it works for search terms here:
Most of the time you can let Google make the decisions for you; the only time you'd want to force the issue is if it's particularly important to the Ad or landing page for a particular demographic. For example, if you've got one Group targeting by placements and another by affinity, but you know the placements get better conversions, you'd want to make sure any user who could match both ends up matching to the placements, and you could help this by ensuring the bids are higher for placements.