Google ranks its Sponsored Search Results according to several factors. One of these factors is Click-thru-Rate (CTR – the percentage of displayed adverts that are actually clicked). So your advert could appear above somebody else’s advert, even though they bid a higher maximum Cost-per-Click (CPC). The reasoning behind this is simple – if your advert is getting a lot of clicks, Google will make more money from your advert even if the cost of each click is a bit lower.
For this reason, it is a very good idea to get your advert as high a CTR as possible early on in its life. Google uses historic data to derive the CTR and so the adverts for a new advert group, for instance, will find it difficult to gain a real foothold until they have built up some history. To get some good early exposure for your adverts, and to help them build some useful history for Google to act on, I think it is worth setting the maximum CPC for the group to a high value initially. You can then reduce the maximum CPC (gradually) as the group becomes more established. You may eventually find that you are achieving higher average positions with a much lower average CPC than you were when you started out.
The Author of this series of articles is Martin Jarvis, who creates and manages Pay-per-Click campaigns for a number of clients. To find out more, please visit us at DMJ Computer Services Ltd.