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so I'm hoping you can help me.

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# 1
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  1. I've read some of the posts on this board and there seem to be quite a few VERY intelligent people out there so I'm hoping you can help me.

    I've been running adwords campaigns for a few years. Recently, the minimum bids for many of my highly targeted words have been upped from $.35 to $5 or even $10 a click. I'm confused as the keyword is already four to six words long. My other confusion comes in when I'll choose a word or group of words that no one is doing search marketing on, and I will come in at $5 or $10 as a minimum bid.

    Was there a HUGE pricing change I'm unaware of? I thought the purpose of adwords was to sell the keyword to the highest bidder, and when there is no highest bidder, you can't say that the #1 spot is for sale for $5 a click??

    I would love it if someone could explain this to me.

    THANK YOU!!
     

1 Expert replyverified_user
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Accepted by Alys (Google Employee)
September 2015

Re: so I'm hoping you can help me.

Top Contributor
# 2
Top Contributor

Hi Xadmin,

 

>> the minimum bids for many of my highly targeted words have been upped from $.35 to $5 or even $10 a click <<

 

Competition is growing and as more and more advetisers join the Google AdWords Program, it is getting fierce and prices of clicks are increasing in some industries.

 

>>  thought the purpose of adwords was to sell the keyword to the highest bidder <<

 

That's the wrong assumption. Top priority is that a good user experience level should be maintained. Second is that Google has a favorable history associated with the term. Next comes your principle.

 

Chances are the second factor is missing in your case.

 

Best,

Lakatos

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Marked as Best Answer.
Solution
Accepted by Alys (Google Employee)
September 2015

Re: so I'm hoping you can help me.

Top Contributor
# 2
Top Contributor

Hi Xadmin,

 

>> the minimum bids for many of my highly targeted words have been upped from $.35 to $5 or even $10 a click <<

 

Competition is growing and as more and more advetisers join the Google AdWords Program, it is getting fierce and prices of clicks are increasing in some industries.

 

>>  thought the purpose of adwords was to sell the keyword to the highest bidder <<

 

That's the wrong assumption. Top priority is that a good user experience level should be maintained. Second is that Google has a favorable history associated with the term. Next comes your principle.

 

Chances are the second factor is missing in your case.

 

Best,

Lakatos

Re: so I'm hoping you can help me.

Badged Google Partner
# 3
Badged Google Partner

One thing that seems to have certainly increased competition are the new SERP formats. When there is only one ad shown per page, the only way to show an ad on the first page is to be in the #1 pos. 

 

What can really make that environment even tougher is when you have advertisiers optimizing for conversions. A $1,000 profit per conversion product/service, can well be worth $100/click depending on conversion rate.

 

The KW terms may be highly targeted, but how profitable are they, especially in this new environment? Can you find the most profitable exact match search query term? What kind of results do you see, and are there any error message when you preview the ad? What is your overall profit margin for that one term? Where is the point of diminishing return, at the current conversion rate, for actual avg. CPC cost? 

 

 

Tom

Re: so I'm hoping you can help me.

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# 4
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another reason may be the offering of free adwords coupon Smiley Happy 

Re: so I'm hoping you can help me.

[ Edited ]
Top Contributor
# 5
Top Contributor

Well, the zillions of coupons that are distributed week by week may of course increase competition a great deal and hence up the price of clicks a lot. It's especially applicable to you in case you are in an industry which gets too many free codes. Like local service providers: plumbers, gardeners, pizza shops etc. That's because such industries consist of a great many micro size businesses and each small unit gets its own coupon. Large corporations like Target, Chevron, or Citibank will never be distributed $100 promotional codes .... Robot LOL

Re: so I'm hoping you can help me.

Badged Google Partner
# 6
Badged Google Partner

That's another interesting point. There was a thread (last week?) where a new advertisier using a $100 coupon had spent their entire budget in two days, and had no idea where the money went. In those cases though, it would seem like the short term costs/bids/pos. would be affected, but stabilize fairly soon. You can only spend $100/click on one click with a $100 coupon. Smiley Happy

 

Of course, that all depends on how many of the zillions of new advertisiers are thinking the same thing, or perhaps, not thinking at all.

 

 

Tom

Re: so I'm hoping you can help me.

Explorer ✭ ✭ ☆
# 7
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Hi xadmin,

As mentioned already before, the purpose is not to sell to the highest bidder but have the best user experience. Have you checked your quality scores already? Your ad rank is determined by a combination of quality score and maximum CPC bid which means that if a keyword is highly relevant, you might end up paying significantly less.

On the flip side, if a keyword has a very low quality score, you might pay a lot even with no competition. This is why you sometimes see high first page bids for keywords with low or no competition.

You can read more about quality score here: http://support.google.com/adwords/bin/answer.py?hl=en&answer=2454010

And if you search the Community, there's been loads of very good discussions around it here as well. For example this one: https://www.en.adwords-community.com/t5/Set-up-and-basics/Ingredients-of-the-Quality-Score-sauce/td-...

Hope this helps!
Karl

Re: so I'm hoping you can help me.

[ Edited ]
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# 8
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