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Max Bid x CTR = 100 points of Ad Rank?

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# 1
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I came across a book that said in most cases, "Max Bid x CTR = 100 Points of Ad Rank". Is this true? I have watched earlier a video clip of Hal Varian on Google Adwords Bidding Tutorial, he said the formula of the Ad Rank is Max Bid x Quality Score. Can anyone explain?

 

Regards,

Joe 

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September 2015

Re: Max Bid x CTR = 100 points of Ad Rank?

Collaborator ✭ ✭ ✭
# 7
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No I cannot confirm this, I have never used keywords more expensive than 5 $. With the proper keyword matching , location and language restriction, you can configure a campaign to target a low volume of useful internet users, thus reducing the keyword bid.

 

For the search campaigns "the system" tells you what are the estimates first page bids and the "top of page" bids.

 

100 $ per click for a keyword is just absurd. You need several clicks to get a lead or a sale. In the best case scenarios you can have a 10-15% conversion rate, this means at least 7-10 clicks before a sale.

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September 2015

Re: Max Bid x CTR = 100 points of Ad Rank?

Top Contributor Alumni
# 8
Top Contributor Alumni

As I understand it, that's right RE the $100 max CPC thing, and the equivalent currency wherever else in the world advertisers are

Jack Porter-Smith
Jack's G+

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Re: Max Bid x CTR = 100 points of Ad Rank?

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Collaborator ✭ ✭ ✭
# 2
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Hello new user ! Welcome to the community !

 

I think you mean

 

Max CPC Bid x CTR = Max eCPM
and highest Max eCPM wins

 

An individual CPM or ‘cost-per-impression’ auction happens with each eligible page view. Although ads are charged on a CPC basis the cost is calculated on a CPM basis – the more impressions you need to generate a click, the more you’ll pay

Re: Max Bid x CTR = 100 points of Ad Rank?

Top Contributor
# 3
Top Contributor

Hi Joe, welcome to the Community.

 

I don't know where you read that - please, tell us! - CTR is not a factor of Ad Rank and I can make no sense of that equation.  As Mr Varian has said, Ad Rank factors are Quality Score and Max. CPC so I'd stick with his good advice if I were you...

 

Jon

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

Re: Max Bid x CTR = 100 points of Ad Rank?

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# 4
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Dear Adrian,

 

Thank you very much for your explanation. One other question, what is the maximum bid amount Google allows advertisers to bid on a keyword? Is it 100 US dollars?

 

If so, are the following correct?

 

Max Bid of 100 x Quality Score of 10 = 1000 points of Ad Rank

 

Conversely,

Min Bid of 0.05 x Quality Score of 1 = 0.05 points of Ad Rank

 

Thank you,

Joe

Re: Max Bid x CTR = 100 points of Ad Rank?

Collaborator ✭ ✭ ✭
# 5
Collaborator ✭ ✭ ✭

I think you book is about all types of PPC systems, and you are reading the chapter about Facebook bids, because this is the way facebook works.

 

Search "Max CPC Bid x CTR = Max eCPM" on google and read the first article there about "bidding-and-segmenting-with-facebook"

 

Adwords works differently using a Quality score

 

https://support.google.com/adwords/answer/2454010?hl=en

Re: Max Bid x CTR = 100 points of Ad Rank?

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# 6
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Dear Adrian,

 

Thank you for the link. I will certainly have a look at it shortly. At this point, could you please confirm if the maximum bid amount Google allows is 100 US Dollars?

 

Thank you,

Joe

Marked as Best Answer.
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Accepted by topic author
September 2015

Re: Max Bid x CTR = 100 points of Ad Rank?

Collaborator ✭ ✭ ✭
# 7
Collaborator ✭ ✭ ✭

No I cannot confirm this, I have never used keywords more expensive than 5 $. With the proper keyword matching , location and language restriction, you can configure a campaign to target a low volume of useful internet users, thus reducing the keyword bid.

 

For the search campaigns "the system" tells you what are the estimates first page bids and the "top of page" bids.

 

100 $ per click for a keyword is just absurd. You need several clicks to get a lead or a sale. In the best case scenarios you can have a 10-15% conversion rate, this means at least 7-10 clicks before a sale.

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

Re: Max Bid x CTR = 100 points of Ad Rank?

Top Contributor Alumni
# 8
Top Contributor Alumni

As I understand it, that's right RE the $100 max CPC thing, and the equivalent currency wherever else in the world advertisers are

Jack Porter-Smith
Jack's G+

Re: Max Bid x CTR = 100 points of Ad Rank?

Top Contributor
# 9
Top Contributor

The max bid a client might set depends upon a number of factors... the CTR, the competition, the conversion rates and the value of the conversions.

 

Whilst I've not had a client spend $100 per click I did have a client who was (happily) paying $11 a click as they were converting fairly well and each converted client was worth an average $7500 to them (lawyers - gotta love 'em!).

 

And I know of real estate companies (back in the day) who were hitting $70 a click....

 

The cost of the click doesn't really matter. I realize that this is a broad statement bound to attract lots of criticism - but one which I would stand by - since it is the cost and value of the conversions that ultimately dictate whether the CPC is worth paying.

 

Obviously, everyone wants to lower the cost of the clicks - but not at the expense of the conversions....  but here's the thing... anyone can get you lots and lots of cheap clicks - but please don't expect any of them to convert. We should work to lower the cost per click within the business model that makes economic sense - not just because we feel better paying $1 for a click compared to paying $10.

Re: Max Bid x CTR = 100 points of Ad Rank?

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# 10
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Dear Jon,

 

Thank you very much for your help. Regarding the book, unfortunately, it was written in Thai Smiley Sad. I am not sure whether or not it was a typo during the approval and publication phase.