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CPC Calculation

by mrjosco
5 replies
  • PPC/SEM
    • |
Anyone have any insights on how the 'first page' CPC estimate is formulated. I am pretty familiar with my niche, as I have been doing it for decades - but many of the main keywords have a 'first page' bid estimate of $2.50 or more.

This makes no sense. Anyone paying that per click would need to be converting at 33% or better to break even! Certainly there aren't that many people donating to the Google machine - or are there really people throwing money away like that.

or even better - are there people converting at 33%+?
#calculation #cpc
  • Profile picture of the author Markets
    I would look further into there sites, and see if they are doing something differently that could justify these high bids.
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  • Profile picture of the author LucidWebMarketing
    Remember that bid and actual CPC are two different things. I may take a bid of $2.50 to get on the first page, based on competition bidding and their QS as well as your QS. But someone bidding that much may pay much less with a great QS, maybe $1 or so.

    Sometimes, the first page bid estimate is off. Nothing I'd worry much about, just get your quality up. The reason it may be off may simply be the data it has to work with.

    A 33% conversion rate, although very rare, is possible. Just yesterday I noticed a client getting a 40% rate on an ad. Too bad that's not for all his products (there are thousands) but many do get over 10%.
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  • Profile picture of the author mrjosco
    Just to add in case anyone else is just starting with PPC like me. When I first set my account up, I placed a small bid on my keywords. Google gave me an error message saying "bid too low for first page" or something similar, the error was prominent and it made me think they wouldn't run my ad if I didn't increase my bid. I was hoping to get data from my bids as much as conversion, so I raised my bid. That resulted in me paying 4x what I was willing to pay.

    I later went back and lowered my bid back down to see what would happen. I am getting the same amount of clicks as before, but at about 1/5th the cost. My ads average position is also 2nd or 3rd - so I appear to still be getting first page views.

    So don't be afraid to bid low. I might lower my bid even more to see what happens!

    (as a side note, my 'estimated bid' for first page is now less than half what it originally was).
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