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Reducing AVG. CPC with QS 10

Follower ✭ ✭ ☆
# 1
Follower ✭ ✭ ☆

Hi guys,

 

I have a campaign of 320€ per day, with 5 adgroups and an average of 40 keywords per adgroup. All my keywords have QS 10 and my CTR is above 11% in all adgroups. I'm in a niche without competition. Nobody is bidding here.

 

- CTR above average

- Ad rank above average

- Landing page Experience: average

 

Stats of today (not finished, GMT +1)

 

Total - all ad groups: 1,427 8,680 16.44% €0.08 €119.89

 

Actually my CPC MAX for all adgroups is 0.40€. I tried to reduce the CPC MAX in order to reduce the CPC, but I got the notice "low bid or low quality score". I want to reduce my avg CPC without losing IMP, or losing a few.

 

The estimated top page bid in almost all keywords is 0.01 - 0.05. So, it means that is possible to pay less than 0.08? How I can do it?

 

As well, I would like to know why the keywords with more trafic tend to have low CPC? Is good to have keywords in the same adgroup without IMP? Because Actually, my traffic only comes to the 20% of my keywords, but I have them in order to have a good Search Exact match IS.

 

Thank you very much.

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Accepted by MosheTLV (Top Contributor)
September 2015

Re: Reducing AVG. CPC with QS 10

Top Contributor
# 29
Top Contributor

Hi David M,

 

The message you get is about low AdRank. AdRank is QS * CPC bid. You must have a minimum AdRank to show a the top of the page. When you lower your bid, that lowers your AdRank. The message does not tell you whether it's a QS problem or the bid is too low. This is a message I would not ignore.

 

I just wanted to point this out for you.

 

It is a common mistake to think that, since there are no other advertisers on the page you should be able to get the clicks for cheap. It just doesn't work like that. Google's main concern is "user experience". Showing an ad that does not get a high enough CTR, in Google's view, is not a good user experience. Low CTR indicates poor relevancy of the ad to the query.

 

I know, you are getting a very high CTR in my view, but, apparently not in Google's view.

 

Best of Luck!

 

Pete

 

petebardo -- Deadhead doing AdWords

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September 2015

Re: Reducing AVG. CPC with QS 10

Top Contributor
# 34
Top Contributor

Hey Adrian B,

 

Which assumption? That AdRank = QS * Max CPC, or that Google's main focus is "user experience", or that you need a minimum AdRank to be in a top position?

 

The first and third are documented. The second is what I learned at a TC Summit.

 

Do I always bid the amount suggested for first page or top of page? No, but that does not mean I ignore the message or that it is false. Many times I find the bid simulator suggesting that a big increase in my Max CPC would produce only 1 or 2 more clicks. I don't increase my bid for that. I find keywords that say bid too low for first page or top of page, but I see the positions for these keywords when the do show are on the first page, and many times at the top of the page. I don't ignore the message, but I take it with a grain of salt.

 

As I mentioned in my last post here, the only way to know for sure is to test and then test again.

 

Pete

 

petebardo -- Deadhead doing AdWords

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Accepted by topic author David M
September 2015

Re: Reducing AVG. CPC with QS 10

Explorer ✭ ✭ ☆
# 40
Explorer ✭ ✭ ☆

>> Why google don't let me to pay the minium if my QS is 10 and my CTR is above average?

 

It's a mistake to say there is no competition. I very much doubt you are the only advertiser using a particular keyword. More to the point, I very much doubt you are the only advertiser to EVER use your keyword.

 

Here's my theory of how the system works and why, even if you truly have no competitors, what is happening and how your CPC is calculated. Basically, the system makes the calculation based on history of that keyword. Like I said, you surely are not the first one to ever use that keyword. So the calculation is based on what happened to others in the past.

 

Think about it this way. We know your CPC is determined from the adrank (bid times QS) of the advertiser below you and your own QS. But what if you are the last advertiser being ranked? The system has to create an artificial adrank of a phantom advertiser. This likely uses the average QS of 5 (makes sense to me) and an average bid for that keyword. So, even if you are truly the only advertiser with an ad showing up, your CPC has to be calculated assuming this phantom competitor. Doesn't matter if by ranking last you are 42nd or 1st. The system needs a reference to calculate your CPC when someone clicks that last ad.

 

So let's say the average bid for that keyword was $0.20, with a QS of 5, the phantom, last-ranked advertiser, has an adrank of 100 (20 x 5). This means that with a QS of 10, you'll be paying ten cents, provided you bid at least that much. You'll never pay just one cent with any QS even if you truly are the only advertiser. The math doesn't make it possible. That's why you don't pay one cent, unless you bid that low.

 

For a keyword that's never truly been used before, that's easy, at least in my mind. You'll always get a QS of 5. It will never be 10 contrary to what most people expect. It's all to do with mathematics.

 

QS is a measure of how you compare (basically CTR) to others for that keyword. If you are the only one using that keyword, the system has no choice but to compare to yourself. The phantom last advertiser's bid will also be calculated accordingly based on your own. Seems to me you will always be paying your bid in this case but that's probably oversimplifying.

 

Until there is another advertiser, your QS of 5 won't change. My guess is creating the keyword in another group would have an effect but I don't know. If so, you could create an ad so bad that its QS would be low and thus pushing your other one higher.

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Accepted by MosheTLV (Top Contributor)
September 2015

Re: Reducing AVG. CPC with QS 10

Google Employee
# 43
Google Employee

Hi there,

 

Thanks for posting!  It sounds like your two biggest questions are: 1.) How are bids determined if I'm the only person bidding on a particular keyword, and 2.) Why did my impressions drop when I lowered my bid?

 

How are bids determined if I'm the only person bidding on a particular keyword?

Theoretically, if no other advertisers were bidding on a particular keyword for which we were showing ads, your CPC would be $0.01.  Now, just because you've only seen your ad show on a search results page does not mean that you're the only person bidding on that keyword; rather, it means that your ad is the only one winning that auction in that particular instance.  Thus, you are still required to outbid your competitors, which would explain why your CPC is higher than that minimum.  We decide how many ads to show on a particular page of search results based on a wide variety of factors, including the user's search query and the quality of ads that are coming into the auction.  Hence, we will not always fill a page of search results with ads.  It is also important to note that the number that you're seeing in the estimated first page bid column is simply that:  an estimate.  The very best indication of how you should bid is your previous performance given your previous bids.  

 

Why did my impressions drop when I lowered my bid?

I certainly agree that you've had some great performance with that 11% CTR!  If you lowered your bids and did not maintain that performance, though, your ad rank dropped in such a way as to prevent you from winning auctions.  Quality score is actually dynamic and changes every single time your ad enters the auction.  I would not put too much bearing on that "10" that you see in the status column, but rather focus on keeping your clickthrough rate strong and steady, and eliminating any poor-performing elements of your campaign.

 

I, or any other member of the AdWords support team, would be happy to take a deeper dive into your account to look at specific metrics and keywords with you.  We're here to help!

 

 

Sincerely, 
Kelly W.

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September 2015

Re: Reducing AVG. CPC with QS 10

Google Employee
# 47
Google Employee

Hi there, 

 

Thanks for your posts! 

 

Our mission here at Google is not to fill a page with ads; rather, we want to provide relevant information (including ads) to users.  If ads are not high quality or relevant to users, we won't show them--not because we are fixing prices for those ads, but because they would not give the user a good experience.  We would rather not get money from those potential clicks, than show irrelevant or low-quality information to users.  It's as simple as that.

 

Again, I do encourage you to take estimated first page bids and quality score bubbles with a grain of salt; there are so many dynamic factors that go into auctions, that it would actually be impossible to predict the exact bid price and quality score that you would need to win an auction.  When I say "dynamic," I mean marked by continuous change.  The number of ads coming into the auction, and their associated quality scores and bids, are just a few of these dynamic factors.  So, the information that you find in the estimated first page bid column and quality score bubble is simply meant as a benchmark to guide you.  The very best insight that you have into auction dynamics is your previous performance.  

 

I think it would be really beneficial for you to have a conversation with one of our support team members.  We'll be happy to talk you through any of the above points, one on one!  

 

 

Kind regards, 

Kelly W.

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Re: Reducing AVG. CPC with QS 10

[ Edited ]
Collaborator ✭ ✭ ✭
# 2
Collaborator ✭ ✭ ✭

Hello David M,

 

I would move some of the top performing keywords in their Ad group which I would manage on manual bidding, and simply set manually a lower price every day and follow the impact on impressions / clicks to test for an optimal CPC.

 

Read here about manual bidding

 

https://support.google.com/adwords/answer/2390250?hl=en

Re: Reducing AVG. CPC with QS 10

Follower ✭ ✭ ☆
# 3
Follower ✭ ✭ ☆

Hi Adrian,

 

I though about that, but what is the reason behind it? I want to understand why is not good to have keywords in the same adgroup that aren't having IMP but have a 10 QS. I can understand that bad keywords could decrease the CTR of the ads, but why they have to increase the CPC of the keywords that are having a good CTR? The CPC depends on the keywords or in the Ad?

BTW, better I move the keywords without IMP to a copy of adgroup without the top keywords, right?

 

On the other side, what about the experiments? Do you think that is a good idea?

 

Thank you!

 

Re: Reducing AVG. CPC with QS 10

Top Contributor
# 4
Top Contributor

Hi David,

 

Keywords with a good QS and no impressions have absolutely no effect on your overall account score and really won't help reduce your CPC's. There is really no point to keeping them around. Impression share is meaningless unless it produces traffic that converts.

 

Best of Luck!

 

Pete

 

 

petebardo -- Deadhead doing AdWords

Re: Reducing AVG. CPC with QS 10

Follower ✭ ✭ ☆
# 5
Follower ✭ ✭ ☆

Hi Petebardo,

 

Thank you for your advise.

 

When I say NO IMP, I mean keywords with 40 IMP per day with a CTR between 9% - 14%. Do you suggest to keep them or better remove/move? My top keyword in the same adgroup have about 16.000 IMP per week with a CTR of 19%. what you will do in order to reduce the CPC in my conditions?

 

About reducing the CPC MAX every day, how much every day?

 

 

 

 

 

 

 

 

Re: Reducing AVG. CPC with QS 10

Collaborator ✭ ✭ ✭
# 6
Collaborator ✭ ✭ ✭
1 cent every day but no less than the first page bid.

What does the statistics button near the CPC say about lower bids ? It is a small square with an ascending graph line on it.


Anyway you have excelent results already.

Re: Reducing AVG. CPC with QS 10

[ Edited ]
Follower ✭ ✭ ☆
# 7
Follower ✭ ✭ ☆

Hi Adrian,

 

Thank you for the tip.

 

I'm a little skeptical about the google adwords recommendations. Are you referring to bid simulator? Find attach a screenshot of the bid simulator for the adgroup with more IMP.

 

https://www.evernote.com/shard/s84/sh/76d118cc-f6c2-4f9e-ad7c-45ad1005b3ea/2e370b093aabc6f0c32118c1d...

 

I tried to follow these tips a few days ago, and adwords noticed me about a low bid or quality ad. So, now I'm a little skeptical.

 

What you think?

Re: Reducing AVG. CPC with QS 10

[ Edited ]
Collaborator ✭ ✭ ✭
# 8
Collaborator ✭ ✭ ✭

Is this a simulation for the entire ad group ? why not simulate only for the top 3 most clicked keywords .

According to the graph , you can Go for the 13 cents directly since it shows only a drop from 603 to 558 clicks for a lot less to pay 40 to 13 cents. If you are not sure just decrease in small steps every week like 20% , this way you will have more statistically significant data.Make the decrease only for the top expensive words not the entire ad group.If you say most keywords are 1-5 cents , why is average cpc 40 cents ? Do the tweaking only on the keywords have the most accumulated cost in the account, for example maybe 1 keyword consumes 10% of the budget.

 

 

 

 

 

Re: Reducing AVG. CPC with QS 10

[ Edited ]
Follower ✭ ✭ ☆
# 9
Follower ✭ ✭ ☆

Adrian B,

 

If I decrease to 0.13 and I run a keyword analysis, adwords will notice me about low bid or low quality ad. I have to be worry if I see this notice? Or the system will adjust the bid and the notice will be removed?

 

BTW, find attach an screehot of the bid simulator for my top keyword. I'm paying a lot for my top keyword, but the funny thing is that every day my CPC for this keyword is decreasing. Now I have a CPC of 0.05 with a Max CPC of 1.50.

 

https://www.evernote.com/shard/s84/sh/f5bdde23-18be-4e1d-9e87-4557a065f274/1ccbdda9ccd0f5cbe4f534b8f...

 

so, if something is working better don't touch it Smiley Happy

 

I'm overpaying?

 

 

Re: Reducing AVG. CPC with QS 10

[ Edited ]
Collaborator ✭ ✭ ✭
# 10
Collaborator ✭ ✭ ✭

You are overpaying. Divide and conquer. Reduce to 50% the bid on the top 3 expensive keywords and run a test for 3 days since traffic will anyway drop by friday. Make a note today on how many clicks you got in the same time interval last week FOR THOSE 3 KW and come back in 3 days to compare data. Decreasing by 50% according to the statistics will have a low impact on your click volume, less than 10%. You have a high CPA Cost Per Aquisition , which means you pay 300% more for an increase of 10% in clicks (13 to 40 cents for an increase of 558 to 603 clicks) , you must reach an optimal CPA.