Google You Dirty, Rotten, No Good, Yellow Bellied, @#$%%!!!!!

4$ a click ?? lol, i think that Google should develop a system to recognize individuals from big time corporations with massive advertising budget ...

I have no PPC experience but I've been monitoring the industry for a while and i think that this is really not a good time for PPC advertising and especially Adwords ...

Maybe other forms of paid advertising would work a lot faster, cheaper, and more effectively .

You have to understand how the QS system works. From your post, you don't. You are confusing SEO and PPC.

First, it doesn't matter if you are ranked #1 in the SERPs for a keyword. It has not bearing on what you do in Adwords.

How does QS work? I explain in more details in my Adwords FAQ. But to make it short, most of QS is your click rate. It's compared to what other advertisers have done with this keyword. If the mean CTR is 4% and your CTR is 4%, you get an average QS (about 5). The higher your CTR against that mean, the higher your QS gets. The higher your QS, the lower your costs as a factor in cost is QS (see formula in the FAQ).

So, if your QS is 5, you have average ads. If you had a QS of 10, you might pay more in the neighborhood of $2 or even less. Note that QS is position independent as well as bid independent. In other words, you may have a 2% CTR in 6th position and a 5% CTR in first, your QS will remain the same. Increasing the bid will have no effect. What you have to do is create better ads that get higher click rates for whatever position you are in. This is the only way, as long as you don't violate Adwords rules (and get a QS of 1) and that your keywords are relevant to your page.

you can never pay more than the max cpc you yourself set to bid.

Hope it converted for you

Or don't list the term you rank #1 for organically, as a word you where want your AdWords to display. Why aren't you targetting your AdWords toward words you don't rank high on yet?

It's obvious that if you bid max CPC to 4$ you should expect to be charged 4$ for a click, don't blame google for every mistake that you make.

The parameters they use to rate quality is highly flawed. I actually received a warning for promoting a "low quality" site using adwords.

Professor Lucid here.

I agree you are not competing with yourself. It's a good idea to use PPC, even if you rank high for a keyword. You cover both bases and taking a bigger percentage of the result page's real estate.

The reason you're paying that much is simply that's the going rate for that niche. That's the kind of range others are bidding. Not surprising since you say it's the mortgage industry. It's competitive and getting one client is worth $1,000s. Read my FAQ where I explain it.

>> My CTR, ads, site optimization, content and everything else is good so that's why I thought it was strange.

Your CTR. Whatever it is means little. You have to look at QS. If your QS says 5, I don't care if your CTR is 15%, your ads just are not as good as the average. That's the whole point of QS.

Site optimization has little to do with QS. This is not SEO. Of course you want to use keywords that are related to the page but that's pretty much where it ends. The keyword relevancy portion of QS is about 25%. You either have it or you don't, no in-between. So if you don't, you lose 2.5 points off your QS.

Improve QS. With the same bid, you'll move up in ranking and your actual cost will go down.

Google rewards the advertisers and Adwords clicks ultimately go to the advertisers that can write ads that steal clicks away fro the organic results. Organic results do not make money for Google like paid result do. If your ads do not steal clicks away from other advertisers and most importantly the organic results, then you are punished with a low quality score and high CPC's. This system is set up to automatically make paid listings more and more competitive. I am sure that Google would dump organic results if they didn't have to list them.

If you don't want to pay that much for a click, then don't bid that much for a click. It must have meant that someone right behind you was willing to pay 3.99 for the same click and didn't get it - or else had a higher quality score than you. 5/10 is not very high. 7/10 or higher is where you want to be. I've paid as high as $8 for a click but for that client it was worth it.

The quality of your ad is mostly determined by your click rate (CTR is about 65% of QS). If your CTR is less than a competitor, Google figures you are not as relevant. Your QS therefore calculates to a lesser value.

Your QS does not exist in a vacuum. It can go up or down because CTR goes up or down. I can come in and have a great ad getting much better CTR and pass you by. By doing so, I'm actually contributing in decreasing your QS. If my ad is near yours and mine is so much better, naturally less and less people will click on yours compared to mine. Again, more can be found in my Adwords FAQ. Reading it might help.