Coming Soon: Improvement to the Top Ad Placement Formula

i always thought that its how it worked so far.

 

Actually, you misunderstood. You must not have read it correctly. You are now subject to a minimum cpc set by google for the top spots. That means, if you are bidding .50 now, in the top spot, and only paying .05, you could ending up paying up to .50 regardless of what the competition below you does.

You are now subject to a minimum price for top spots. If the minimum price for the top spot is .4, and you are bidding .5 with no one below you, you will end up paying .4. If you want to go back to paying .05, you will have to lower your bid to .39, but at that point, you fall out of the top.

 

I didn't read it wrong.

There's always been min prices. That's nothing new.

 

That was my first reaction.

To quote the big G:

Your actual CPC will continue to be determined by the auction, but subject to a minimum price for top spots. The minimum price is based on the quality of your ad and is the minimum amount required for your ad to achieve top placement above Google search results. As always, the higher your ad’s quality, the less you will pay. And you will never be charged more than your maximum CPC bid.

How might this affect me?

We anticipate that most of your ads will continue to perform as they have in the past. In some cases, you may see that ads previously shown alongside search results are now shown in top spots, and vice versa. As a result, you may see a change in the average number of clicks and average CPCs for impacted ads.

If you have a maximum bid of £0.50, and you are only paying £0.20 per click to appear top, but the threshold to appear at the top is £0.40, then one of two things must happen. Either

A) Your actual cpc doesn't change, but you appear at the top. If so, then the statement Your actual CPC will continue to be determined by the auction, but subject to a minimum price for top spots sounds wrong.

B) Your actual cpc does increase, and you appear top. If so, then the statement is correct, but your spend will increase.

C) You don't appear at the top. This doesn't seem to make much sense in the 'new world'.

Google also say:

Check your account stats for ads that often appear in high positions on Google. If their CPC bids are dramatically higher than the actual CPCs you normally pay, consider changing your CPC bids to a level that you're more comfortable with

Again, this suggests possibility B, so I think there will be an increase in cpc. That said, you can always reduce your bids to below the threshold, but keep it above your actual cpc, if you want to retain your old position on the right.

 

I think I know what you mean.

What I think you are saying, is that there have always been minimum prices for top spots, and those minimum prices were compared with your actual CPC to determine if your ad would be displayed at the top. In a sense, if you are currently in the top, then you should not have to worry about getting knocked to the side. However, if that was the case, the "vice versa" part would have been left out of the following statement:

"We anticipate that most of your ads will continue to perform as they have in the past. In some cases, you may see that ads previously shown alongside search results are now shown in top spots, and vice versa."

The only way your ad could be pushed to the side would be by not meeting the minimum price required for the top spot. New competition couldn't push you to the side, because if they were ranked above you, and weren't eligible for the top before, you would be at the side anyway.

What is actual going to happen, is there will be a new minimum cpc for each keyword. It will not be equal to the current minimum which your actual cpc is compared to now.