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What Happens When You Increase CPCs

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Andy Black

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With AdWords paid search, doubling your bid price moves your ad higher up the page where you’ll get twice the CTR (mileage will vary obviously, and this doesn’t work if you’re already in top ad position).

So you’ve doubled your traffic volume.

THEN, because there are less advertisers competing for the higher ad positions (because they can’t afford the higher CPCs), your ads show more often in that higher ad position. Let’s say twice as often (aka your Impression Share has doubled).

So your ads are showing twice as often, in a higher ad position where you get double the CTR.

Which gives you quadruple the volume.

The double whammy benefit is that if you doubled your CPC because you managed to double you conversion rate and you’re just going back to your previously profitable CPA, then you’ve ended up with 8x the number of conversions.

It’s a beautiful thing when it happens.

However, there’s a downside. If you halve your CPCs, then you’re going to end up with 25% of the traffic.

So it’s knife edge stuff. Your performance can go through the roof, or crash and burn.

A sure fire symptom of you being on the wrong side of the algorithm is if you keep pushing bids to maintain ad position and maintain click volume. That means Google’s AdWords algorithm prefers your competitors campaigns to yours. You can’t really bid your way out of it (although of course it does help a bit… hence Google’s common canned advice to “bid more”).
 

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TheDillon__

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Fantastic stuff Andy, I'm reading through all of your posts right now taking notes like a madman. This is exactly what I've been looking for!

I've never been so excited to give someone my money - I can't wait to get your full course.

In this case at the end of your post, what are some ways to make Google "prefer my ad" over that of my competitors, without endlessly boosting my CPC?


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Andy Black

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what are some ways to make Google "prefer my ad" over that of my competitors, without endlessly boosting my CPC?

Make it so Google earns more by showing your ad than by showing your competitor's ad.

How much they earn is your CPC multiplied by the number of clicks.

Google's RPM is your CPM.

Get more clicks for each 1,000 times they show your ad.

i.e. Increase your CTR.

You can increase your CTR by removing unwanted impressions (people searching for stuff you didn't want to show your ad for - typically too broad with your keyword matching).

... and by improving the relevance and attractiveness of your ad - to what the person was searching.

Check out post:
 

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