Today I'm going to talk about the thing that many newcomers find most confusing about Google - and I'm going to explain why it's a really ingenious twist that will actually help you. The price you bid is almost never the price you actually pay. You almost always pay less.
First, it's a little bit like Ebay: You pay 1 cent above the position below you, not the maximum that you bid.
But there's an even more important secret that is the key to getting lower and lower prices, even while other bidders are jumping into the game: Your Click Thru Rate (CTR) is MORE important than how much you bid.
The Click Thru Rate is the percentage of people searching who click. If 100 people search, your ad shows up 100 times, and one person clicks through, that's a 1% click thru rate. So let's say I've got a 1% CTR and I'm paying $1.00 for position #2. Let's say you've got a 2% CTR --- you only have to pay 51 cents to get position #2 and knock me down to position #3.
That means if you're 2 times as relevant, you pay 1/2 as much! The rules are simple, but the implications are huge. When you achieve high click-thru rates, your bid prices go down, down, down and your traffic goes up.
Related post : Five Days to Success with Google AdWords- Day 1
Tags: adwords, google, perry marshall