I'm currently bidding a max of 10cpc on a phrase. G has consistently charged me 10c for every click and has given me an average position of 4.5 - 5.0. Over the last few days they've been dropping the average cost to me of a click to 9c, then 8c, then 7c. My average position is still 4.5 - 5.0. I've rationalized this by concluding that the people above me are bidding quite a bit more than 10cpc and the people below me are bidding a lot less. Does that seem reasonable?
Your quality score is probably improving. If you just started noticing it over the past couple days it's probably due to the landing page being factored into the quality score.
Excellent. If this is the case, I'd rather they charged me 10cpc but moved my ad higher. I wonder if I should raise my bid to 15cpc on the basis I'll be charged nearer 10cpc because of a favorable quality score? I could try this but I've read somewhere that if you bid higher on Adwords, Google punishes you with a much lower ad position if you ever revert to your original lower bid. Of course this may not be true but it does put me off raising my bid.
As a rule of thumb I only up my bids to what I'm willing pay long term. I honestly can't remember the last time I upped a bid then reversed it later so I'm not sure what impact that would have on placement. I assume it would take that, new, lower bid, your historical CTR and the landing page to reevaluate your quality score and place your ad based on that new calculation.
It's an interesting situation. I'll monitor it for a while and see if 7cpc stabilizes. If it does I'll increase my bid to 15 cpc in stages to see if I can push my ad a bit higher without exceeding 10cpc on average. Thanks GFC.
Back to charging me 10cpc again today - maintaining an average ad position of 4.8. I guess someone else must have started bidding higher and Adwords is taking the full 10cpc to maintain my position - wish I could see the algorithm.
You might consider bidding 11cpc. People tend to bid even numbers and Google sets minimums on the same even numbers. Bypassing any bidders at 10 may get you a higher placement with little cost.
I was a bit daring a little while back and tried this for a day - but it made no difference at all, so I guess the other bids at that time were higher still.
Quick update if it's of interest to anyone: A week ago my ad fell to 5.0 - 5.2 so I upped the bid to 12 cpc. Since them it's averaged around 4.6 and I've been charged 10.5 cpc on average.
CTR can have a dramatic effect on placement. I have a site where my average cost is 55 cents and has a #4 placement. A friend has a site in the same exact sector, is bidding on the same keywords, with a $1.25 bid and his site sits at around #14. I think the url shown is the cause. I believe mine is better and he has even used my exact wording of the ad - so the only difference is the url. Both sites content are pretty much equal in quality and focus. His CTR is about 1/3 of mine.
You bet. I've seen ad placement vary by a dozen or more positions - all things being equal except the ctr. Don't rush through your ad copy - it will help make or break a campaign!
I wonder if it has anything to do with the Page Rank of your website? What if they had a formula that compared your Page Rank and CPC and gave you a position according to those results in Google Searches.