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How Cost-Per-Click (CPC) In AdWords Affects AdSense
Despite the so-called "Death of AdSense" (which happens to be a smart marketing ploy), there are still a few good success stories. At least, the marketers who carry the right beliefs within them know what they are doing to persevere and achieve desired results. One of these correct beliefs is knowing how bid pricing works. Generally speaking: 1) If there are not enough ads to go around, that particular niche is too small to try. 2) If the "general economy" of the ads is rather low, avoid the niche too. That's why there are high-paying keywords and low-paying ones. 3) If one site performs better than a similar one in AdSense clickthrough rates, that site will be served better paying and better performing ads. That's how smart pricing works. I'm sure Google has many secretive and subtle metrics to disqualify junk sites and the corporation insists on surrounding itself with webmasters who are committed to providing quality work. Going back to point 2), no matter how genuine sites are in providing valuable content, webmasters need to know something about the state of the competition related to a supposedly high-paying keyword. There is a general belief that "certain keywords pay highly" (granted), like bankruptcy, cancer, lawyers etc., but without research to back them up, such a belief does not stand on a foundation. Google does not take from AdWords advertisers the maximum bid price they put in their account; this is important to recognize. For example, the first-placed ad may have a max. bid of $12, but the max. bid of the second-placed ad stands at only $2. The top advertiser does not always have to fork out $12 to maintain his ad in first place. Google Advertising works such that it has a sliding scale for the bidding process. In other words, you bid on the keyword 'bankruptcy' and you decide that it is only worth $1.95 but you are willing to pay up to $12 against your competition. Then one day, your closest competitor's bid is $2. Google will ante up 6 more cents on your behalf to keep you in the top position and continue to do so for as long as you can afford up to $12. Google sets these special perimeters when they set the account up for that keyword. That means Google can only pay AdSense publishers as much as the next highest existing bid price. Then again, as you do your keyword research, Google only shows average CPC as the real numbers change dynamically. So it is crucial for publishers to appreciate the bid pricing gap between 1st, 2nd, 3rd and 4th-placed bidders to make an educated guess of how much they will be paid for certain AdSense ads. |
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This intel was contributed by Nelson Tan
Nelson Tan
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May, 2012
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