Someone explain this discrepancy to me - Adwords keyword tool "lies" to me

[GeorgR.]

Before i start a campaign for a specific keyword i do rudimentary keyword research using the adwords keyword tool - as probably everyone does.

I enter my keyword in the tool for the egnlish speaking market, targeting USA.

Keyword tool comes back, shows me the avg. CPC for this keyword is $0.05 to get on the first page.

I say "GREAT!" and i make my site and adgroup and i get an "ok" quality score of 7/10. (I made a clone of the vendor site)

Yes, QS could be better, but it could also be worse. 7 is not that bad

I bid $0.30 and Adwords tells me that the MINIMUM BID for the ad being shown in $0.45 (as opposed to $0.05 i got from the tool!) - needless to say that for the particular product from clickbank..AGAIN $0.45/CPC is 100% out of the question to even take a second look at the niche/keyword.

Why is this? Why does the keyword tool lie to me?

[dburk]

Hi GeorgR,

Without seeing your campaign structure I can only make guesses. I suspect that you are looking at an estimate that is based on keyword that has historically been highly optimized and probably has a $0.05 historical CPC average. Your campaign may be structured in a way that significantly increases your cost.

The keyword tool gives you a prediction based on historical averages. The tool cannot know if you will optimize your account structure and avoid broad and phrase match versions of the keyword.

Are you using more than one keyword per ad group? Are you using the exact match version of the keyword? If you are using broad match that would really through it off.

[GeorgR.]

i dont use broad match. i use phrase/exact in that ONE adgroup.

Knowing that the estimated average from the tool NEVER exactly will equal the actual necessary bid - but THIS discrepancy is just too high.

An explanation would be...it is a pretty new CB product and the google tool shows the averages ...but recently many people started to bid on the keyword, like in the last month?

[GeorgR.]

by the way i have all my clickbank ads for english speaking countries (the major ones) in ONE campaign, i dont make an extra campaign for a single product i want to try out.

[dburk]

Hi GeorgR,

The key concept in optimization is granularity.

You need to split your broad and exact keywords into separate ad groups. You also need to split the USA into a separate campaign. The marketing trends can very much between different English speaking countries.

The difference between phrase and exact match is often huge. By combining them into the same ad group you may be diluting a top performing exact match keyword. Same goes for combining countries, the market for some products can be very different in various countries, you might even need to create separate campaigns for regions within the USA for some products.