How is CPC determined?

If I bid high for a keyword to ensure top position, can I assume that my actual CPC will be just very slightly above the next nearest bidder?
MP
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No. Actually your could bid less for top position. Everything depends on your keyword quality score.

 

Strictly speaking, buskond is correct. However, more generally you are also right; all things being equal Google only charge you what is required to beat your nearest competitor (rounded up to the nearest £0.01)

Put simply, your position is determined by your adverts rank ('ad-rank') that is calculated by multiplying the keyword's Quality Score by the bid. So, for example,

Your keyword has QS of 8 and bid of 20p (£0.20), ad-rank = 160
Your competitor has QS of 7 and bids 25p ............ad-rank = 175
Your competitor will appear above you and will pay 23p per click - QS7 x 23 = 161

But, if you have QS of 9 and bid 20p, now ad-rank = 180
You will appear above your competitor and pay 20p per click.

Or, your QS is 8 and you raise your bid to 25p, now ad-rank = 200
Again, you appear above your competitor but now pay 22p per click - QS8 x 22 = 176

 

Hi,

Please read the google adwords quality guidelines, your goal will clear, http://adwords.blogspot.com/2005/12/new-addition-to-quality-score.html

 

MikeyP,

improving the quality score is the key to lowering your bid.

Write better advertising copy and design better landing pages. In the end cost per click is just one element of the value chain that delivers customers at the lowest price.

 

There are other factors too like keyword & ad text relevance, and keyword & account performance history.

 

Account performance history? Do you mean that google will charge you less if you have made them more money in the past?

Thanks

 

Actually, in a sense, yes! Google use the historic CTR of the account as a factor in the individual Quality Score calculation. So, the higher the CTR in the past, or, in other words, the more clicks you have paid for , the better your QS. Of course, it is not really so straightforward, since you could be paying for 500 clicks a day with a very low CTR or 500 per month with a very high CTR, or vice versa, so it is not a measure of the amount of money you have made them but their return on the exposure they have given you (i.e. if each impression represents a unit of investment by Google the account performance history is their ROI)

 

Does it (most things said/written on this thread) apply to content network bids?