A very insightful article on the mystery that is Google AdWords pricing... http://www.pbs.org/cringely/pulpit/pulpit20060525.html
Very interesting article and explains why our AdSense earnings are low if you have huge company ads on your site. You might get a lot of clicks but they are only worth a couple of cents each. If this is the way AdWords work then Google will be loosing small companies because they can't afford advertising and they'll go somewhere else with their money and we'll be showing MSN ads or YPN ads instead!
Exactly; the equation works in reverse for publishers displaying AdSense. You might go into the AdWords tools and see that you need to bid $10 to show up for "Texas Data Recovery" ... but if you show those ads on your sites and big advertisers are bidding on them, you might only get paid a dollar per click because of their quality scores (based erroneously number of ads in the system).
More ad groups or campaigns means less per click? If that's the case, I'd go make 100's of campaigns and see what happens. There are thousands of adgroups I'd create if the bids weren't so high, but if I make thousands of em, and bid real low, they may eventually show anyways?
He decided to write the article with not so true information: There is no Google secret regarding min bid algorithm like Mr Robert X. Cringely says. If you create an ad that no one click your keyword will be disabled, not your ad - this is not a secret this is a clear rule.
Well part of the point of the article was that it is a secret sauce and that is standard operating procedure these days-- even if it means real dollars from real people. It is simply raising the cost of entry to new sites-- just like the natural SERP new site penalty. If you can't afford to run a ton of ads (in large campaign chunks), your ads are going to cost more. If your ad isn't clicked much, yes, it will be disabled. His point was that if you put that low-click ad in a campaign with 1000's of others where some get clicks, the overall cost will be much lower. As a small focused business, you can't afford to run that ad, but the big campaigner will get it at $0.05 and can run it all day long. At least that is what the author figured out from his talks with Google.
quality score is based in part on the relevancy and quality of the landing page- we don't know (do we?) but I suspect pagerank and landing page quality are directly or indirectly related- and I'd imagine that these high volume bidders are the same sites that have high pageranks- like it or not, pagerank, generally speaking, does measure the quality of sites reliably looks to me like cringely is basically a critic (the kind that gives critics a bad name)- those of us around google seo, adwords, adsense for some time know that the algorithms they use are sophisticated, have to be- and that you can't figure them out- criticizing them from the outside is semi-ludicrous because you don't know exactly what they are! even google's definition of what quality score is is vague- e.g. "and other relevancy factors"- https://adwords.google.com/support/bin/answer.py?answer=21388 i do agree it's a problem when you're trying to advertise on a non-competitive word and the required minimum bids go up - although if this is because no one is clicking on it, it's moot - something i didn't see in the article was the fact that the actual cpc comes out to be different from the bid... i wonder if the example guy's actual cpc was actually quite affordable, despite the inflated minimum bid.