I've only been using AdWords for around six months but have spent a fortune - so much that I even have my own account manager! What I have learnt is that, over time, you can reduce your outgoings considerably by initially bidding high, writing good copy for your ad, and by making sure that the competition doesn't grab the number one spot. By following these simple rules I've reduced my daily spend by 50%. The way I see it this: if you're in the number one spot - AND you have good Ad text - you're going to get most of the clickthrough traffic when users are presented with the results of their search. Remember, Higher CTR = Higher Quality Score = Lower CPC = BIG savings. After you've dominated the number one spot for a few months, you can slowly start to reduce your bids until you discover what everyone else is paying. I'm now spending around 5% of what I was spending six months ago - but still have more than 20 keywords in the #1 top spot.
But can you be sure that your competitors have not reduced their bids at the same time? Its hard for most people to get this information as the volumes are not high enough so knowing this stuff is useful.
I thought this was a proxy bid. As in, it doesn't matter how much you bid, you will pay slightly more than the next lowest. Thoughts???
Thats sort of right except.......Higher CTR = Higher Quality Score = Lower CPC. So you could be spending 10 cents less than the next guy