I am starting a PPC campaign...and came up with about 500 keywords.... The bid prices are high....and i'm not sure i can afford to be in positions 1-4...as i know that is where the CTR is best. Will i be penalized for having KW's that don't have a High CTR? Is it best to have less KW's? -Thanks in advance... ~T
What's going to happen is that your quality score will go down; which will result in you having to pay even more per click. A professional adword specialist would follow a routine of first starting out by bidding above your desired amount. Just so you can be in the top 3 positions. If your in the top 3; then your CTR will be higher; and you should end up with a "Great" quality score. If you receive a "Great" quality score; then you may bid lower; and you will still remain in the top 3.
The CTR and QS also depends upon your ad. Some of my ads are at position 7-8 but the ctr is at 16%. I know CTR mostly depends upon ad postion but not always. It also depends upon the copy of your ad.
Google implemented something called position normalization many years ago, meaning that if you want to stay in position 7 you will no be penalized as your QS will be established as a position 7 advertiser. This means google understands that position 7 is expected to perform less and they are not going to reward the top advertisers just because they want to bid more. However, if you ever want to leave position 7 for position 1 - 3 in the future you may have to pay more to climb the ranks since your QS history was established for a very low position.
To answer the original question, yes you will be penalized with high min bids if your ctr is too low. You must start and maintain a high ctr to succeed.