Jason Nyback asked:


PPC (Pay Per Click) bidding is how advertisers choose the keywords for their ads and set a price for how much they are willing to pay per click for advertising. Google AdWords is a pay per click advertising service. Advertisers pay for each click or person that clicks on their ad which contains a link to the advertiser’s website. Google’s system is a bit complicated for the beginning advertiser.

In Google AdWords’ bidding you select an amount you are willing to pay for each click. You also designate how much you are willing to spend daily.

Basically the more you bid for click the better placement your ad will receive. AdWords also gives each ad a quality score. This scoring system is based on several factors including the CTR (click-through rate). A higher bid doesn’t always mean higher placement. Google uses a Max bid, which is the most you will pay per click on each ad.

The rank of an ad is determined by this equation: ad position = max bid x CTR.

Some keywords are very competitive and a high rank for certain keywords can be a money-losing situation. You will pay so much for a position you will not make enough in sales to have a profit. While first page placement is optimal the cost for some keywords can be prohibitive.

A great way to get on the first page is to examine the competition and attempt to get their traffic. You will need to writing ads that are better than theirs and bid slightly lower. A low-bid ad can get good placement when the ad has a high CTR.

Split testing your ads will help you determine which ads are best and how much of a bid or CPC (Cost Per Click) each one justifies.

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