Minimizing maximum cost per click? (max. CPC)

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treat_cancer_nl

Joined: Aug 28, 2007

# Posts: 33

Posted: 04/29/2008 09:33 am

There are 2 kind of ads. One is ads shown on search engines (search) and one is ads shown on websites (content).
If I am advertising on solely search engines (no content ads), is it always a wise strategy to minimize the maximum cost per click (max. CPC).

So if the min bid is 0.08, should I set the max. CPC to 0.08???

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trace_johnson

Joined: Apr 09, 2008

# Posts: 8

Posted: 04/30/2008 07:07 pm

The minimum bid is the smallest amount you can bid for a specific keyword. In cases where the term you are bidding on has little or no competition it is good to stick with a lower bid. This is rarely the case though. Your maximum CPC should be determined by two things:

First your ad positioning. If you are ranking on the second page i.e. 10+ in the sponsored results you will see dramatically fewer clicks on your ad. If it is a highly competitive term, ranking for the first and second spots could get very expensive. I usually aim for an average position of 3-4 on competitive terms. The first position might get you a lot of clicks, but it will also cost a lot more for each of those clicks.

Second your conversion rates. Once you have had an ad running for a while and you have some good conversion statistics, start to test which position produces the highest number of conversions. Then you can alter your bid to rank for the position which converts the best.

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treat_cancer_nl

Joined: Aug 28, 2007

# Posts: 33

Posted: 05/03/2008 07:21 am

Thanks. I have another question. If a keyword isn't relevant it will have a very high minimal bid. For example if I add keyword cars, but my website is mainly about airplanes then I will see that the minimal bid for cars is 0,40.

My question is: is it always a good strategy to eliminate all keywords that have a very high min. bid (keywords that aren't relevant)???

Because for my website I have this situation.

I want advertise my website on keywords "cure cancer". Unfortunately, the min. bid is 0,30. But... This is a very good keyword for me, the amount of conversions is high.

Should I drop the keywords "cure cancer" and instead choose for other keywords that convert less?

Thanks!

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trace_johnson

Joined: Apr 09, 2008

# Posts: 8

Posted: 05/08/2008 06:42 pm

treat_cancer_nl,

The best answer I can give you won't actually tell you to pick this keyword or that keyword. It all comes down to your cost per acquisition. Say for instance you were paying 5 cents for a click for the term cars, but you only sold airplanes. Even though the term airplanes might be 10x the amount you spend on one click for for cars you might drive 1000 people to your web site with the term cars but none of them will buy your airplanes. You have spent $50. but you didn't make any money. On the other hand you might spend $400. on the term airplane to drive 1000 people to your web site, but if 100 of those people buy a $50 airplane you will have made $5000. It is much more beneficial to spend the $400 on airplanes if the term actually converts into profit at a better rate than cars. Both of them could be worth spending the money on but it comes down to how much can you spend and it still be profitable?

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