Hi, I'm bidding on some keyword for about $0.65, google is charging me an average CPC o $0.49, I've used to bid on that keyword for the same price, and sometime have an average CPC of only $0.31.... so what are the factors? the CTR is the same as always - about 13%, in the #3 position... do you think I should outbid my competitors to receive more traffic, increase CTR, and then I would still get a lower CPC, or that would necessaraly increase the CPC?
One of many possibilities why your CPC vary sometime (lower in this case) is because somebody else are playing with his/her campaign, maybe tweaking the ad copy or adding/removing keywords which effect the QS and since your ad has better QS then you pay less. As far as I am concern to lower CPC in general you need to increase your ad relevancy starting from targeted keywords, appealing-relevant ad copy, and landing page. I am sure you've read so many adwords campaign techniques, right? such as "copying the best" technique, etc. Hope it helps.
The factors that determine your cost per click are 1) Your bid 2) Your Ranking Quality Score 3) Your competitors' bids 4) Your competitors' Quality Scores. Google multiplies your bid by your Quality Score, then does the same to your competitors. It ranks your adverts accordingly, and charges you just sufficient to place your advert one position above the advert below you. For example, if you have a QS of 2.0, and you bid $0.65 per click, and the advert that appears below you has a QS of 1.5, and a bid of $0.64, then... Your adjusted bid is $1.30 (0.65*2.0) Your competitor's adjusted bid is $0.96 (0.64*1.5) Your adjusted CPC is $0.97 (in order to beat him) Your actual CPC is $0.49 (0.97/2.0) So what can change your CPC? Many things. 1) He increases his bid and jumps over you - you now drop down a place, and your cpc is calculated on the next competitor down. 2) He increases his bid, and stays where he is. You now have to pay more to appear above him. 3) Your Quality Score changes 4) His Quality Score changes 5) Someone else's Quality Score changes, and they move ahead of him, or below you (if they were higher). 6) Someone else changes their bids, and they move ahead of him, or below you (if they were higher). What affects your Ranking Quality Score? 1) CTR rate - the keyword's clickthrough rate, the Adgroup's clickthrough rate and the campaign's clickthrough rate, on Google (not the Search Network or Content Network). 2) The relevance of the keyword to the search query - Exactly the same is best. 3) The relevance of the advert to the search query - ideally, the advert contains the search query in the top line. 4) Other things that Google don't tell you about. Possibly things like Bounce Rate?