I have set up my Adwords account, and the whole Max CPC thing confuses the hell out of me. None of my keywords have any competition (my market is highly niched). I know this because I google these words all the time, and ads never come up. The thing is, some estimate a .05 cpc (ideal, obviously), but others also with no competition are much higher, probably because they contain words that are individually more popular (like books). My question is, what happens if I just set a Max. CPC at .05 when there is no other competition? Does Google just decide not to run it at all because I have bid too low? Or is the bid really all about the placement? I of course want to run the most profitable campaign possible, but seeing as my market is so niched, will I be hurting myself by low-balling?
The 'no other competition' thing is a constant red herring. You will not necessarily get a cheap cpc just because you can't see any other ads. Look at your Quality Score - it's perdicated on relevance, and when a campaign is running, click through rate. Not competition. If you're asking - if it estimating 80c for a first page bid but there are no other ads running, will I get shown if I bid 5c - no, probably not.