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Google Adword Question

by babywarrior
10 replies
  • SEO
    • |
1 thing i have never figured out is this.

Company A bids - $10
Company B bids - $8
Company C bids - $1
Company D bids - $1

Assuming QS is the same for all of them, when a person clicks onto B, does he pay $1 + or does he get charged $8?
#adword #google #question
  • Profile picture of the author askloz
    one cent above the person below them, plus other factors that will weigh into the smart pricing.
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    • Profile picture of the author kindsvater
      Originally Posted by askloz View Post

      one cent above the person below them, plus other factors that will weigh into the smart pricing.
      I've tested this scenario using multiple Adwords accounts for different businesses - and I cannot agree. Of course, it is impossible to know every factor Google may consider, but even using two virgin accounts there was no indication the CPC charged was more than another bid.

      Rather, certain types of keywords and sites, IMHO, are valued differently by Google, creating a base value. Thus, one person bidding on a keyword does not necessarily get penny clicks.

      And two people bidding on a keyword, even for the same destination site (which means landing page QS is identical), the shown ad does not necessarily have a higher CPC.

      Rather, Google seems to evaluate CTR and other factors (similar to its SEO rankings), which are then used to determine click costs. I just haven't seen a bid amount by one advertiser as creating a price floor for another advertiser.
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  • Profile picture of the author babywarrior
    so basically company b should be paying $1.01 if all other factors are the same
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  • Profile picture of the author askloz
    @kindsvater, you can check with the adwords staff if ya like, there's a video out there they made that states that you only pay 1 cent more than the person below you if you bid more than them, but of course, other factors do come into play, but assuming the QS and other factors are the same, it will come down to clickthrough rate, if the ctr is that good, one can end up paying less than those below you and still have higher ad placement.
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  • Profile picture of the author Lucid
    Not sure which video Loz is talking about but gives the pricing formula:

    Price = (QS(b) * bid (b)) / QS(a)

    The QS of the next lowest advertiser times his bid divided by your own QS. There may be an extra cent added to that.

    So in babywarrior's example, if everyone has the same QS, each advertiser pays the bid of the one below them as the QSs cancel each other. The last one pays his bid of $1 although there may be special rules for the last position.

    Of course, it's impossible that every one would have the same QS, not in Google's eyes (googly eyes?). The QS is calculated to many decimal places and they will make a difference in both ranking and pricing. Maybe just a few pennies but a difference nevertheless.

    And your QS changes all the time with each search as kindsvater points out, the main component is CTR. Every one's QS changes up or down slightly for every search which of course affects ranking and pricing for all advertisers. It is by no means static.

    More details about QS.
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  • Profile picture of the author askloz
    Yup,that's the one.
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  • Profile picture of the author babywarrior
    Hmm doesnt this create a weird playing field?

    as in say there is this jackass whereby everyone is bidding around $1 and he comes in and bid $10 and if you want to get back the 1st position you would have to bid $11. (assuming again all other factor like QS is the same)

    What this essentially mean is you are paying $10.01 to be 1st and him $1.01 to be 2nd

    either that or you can bid $9.90 so that he pays $9.91 per click while you pay $1.01. (assuming all other bidder bid $1 max)
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    • Profile picture of the author tryinhere
      Originally Posted by babywarrior View Post

      Hmm doesnt this create a weird playing field? as in say there is this jackass )
      No it does not but there are many jackasses who base their bid on what everyone else is doing over and above worrying about their own campaign.
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    • Profile picture of the author Lucid
      Originally Posted by babywarrior View Post

      Hmm doesnt this create a weird playing field?

      as in say there is this jackass whereby everyone is bidding around $1 and he comes in and bid $10 and if you want to get back the 1st position you would have to bid $11. (assuming again all other factor like QS is the same)

      What this essentially mean is you are paying $10.01 to be 1st and him $1.01 to be 2nd

      either that or you can bid $9.90 so that he pays $9.91 per click while you pay $1.01. (assuming all other bidder bid $1 max)

      You don't know what others are paying. So if you want to outrank someone, you can't just say "I'll bid $10 because he is". Your QS and his also affects your position AND actual cost. As tryinhere said, worry about your own campaign. Bid what you can afford, improve your QS.
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  • Profile picture of the author azu12
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    • Profile picture of the author John Hocking
      You pay just above the bid of the guy below you.

      So if you bid $10 and the next guy down bids $1. You pay just above $1 based on the rate Google sets.

      Buy if a new guy comes in and bids $9. You start paying just about $9.

      So it is not a good idea to bid too high.

      I like to play with it until I rank ads 4 to 6. You will get less clicks but they are better targeted and less random or lazy clickers.

      This will help you manage your budget better.
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