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How much to pay for keywords.
A burning question for AdWords newbies is, how much should I bid on my keywords?
There is no clear answer for finding your ideal bid price. You should only pay for what you can afford. You can find out how much you can afford by doing some simple math.
For example, let’s look at an example scenario:
- Youre selling video courses for $200.
- For every 100 visitors, 3 turn into customers. This is a conversion rate of 3%.
- If you bought 100 visitors at a cost-per-click of $3, this would cost $300.
- With your 3% conversion rate, you will have made $600 in sales, and a profit of $300
So to calculate you ideal CPC, I’m sorry to say, you do need to sit down and do some math and figure it out. It cannot be avoided. But to keep it simple, you should only pay what you can afford—otherwise you should be spending your marketing dollars elsewhere.
Heres the catch, you can only find out what your cost-per-click is after running your campaign for a while, when you have accumulated some data. So, run a small test campaign to begin with, to collect data. Use the information to make projections, and only pay what you can afford in a larger, more serious campaign.
In case you’re wondering how prices get calculated, the Google AdWords cost-per-click network uses a bidding system, which means you are taking place in an auction with competing advertisers. By increasing bids, your ad position increases, leading to more traffic or customers to your site.
Here is where it gets interesting. Google awards an advantage to advertisers showing ads with high quality and high relevancy. This is Googles Quality Score technology. Ads with a higher number of clicks and relevancy are awarded with a higher Quality Score, and subsequently receive increased ad positions and cheaper prices!
Keep this in mind when writing ads and choosing your keywords. Your ads should be relevant to achieve the highest Quality Score possible, so you can receive the cheapest cost-per-click.
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