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Google AdWords Bidding Tutorial
Our Chief Economist, Hal Varian, explains the how to adjust your bids to maximize the profit from your marketing investment on adwords.
25 Responses to “Google AdWords Bidding Tutorial”
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if the CPA is 100 $ how did you make profit on that sale ? in the first simple example ?
I don’t see where the “cost” value comes from if you haven’t actually done it at the CPC value. Does this mean that before applying this you have to run the auction at each value level?
Im a PC!
that is true
google bunch of robbers
consigli molto importanti da ascoltare con attenzione e mettere in pratica… e poi si ottengono grandi risultati……
Wow, so in this example google makes more than the guy selling it!
The theory about ICC is fine if IF on every position you will have the same conversion rate.
Common place 1 / 2 in Google will get most traffic, but it wont get the highest conversion rate. I am managing Google PPC account (spend $300K a month on google) and I am telling you guys, In 80% of niches position 1 and 2 will have lower / higher conversion rate when position 5 and 6. So you have to make that adjustment as well when calculating your Max Profit per Conversion, ICC etc.
Applying this tutorial to your own Adwords campaigns can be very revealing. Many Adwords users are unaware they are spending more per click than their conversions can afford.
HOW DO I JUST PAY FOR CONVERSIONS?
Hey Hal…. can i have 50% of googles proffits? please…!
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What! if you make $1000 profit, you have to give nearly $700 of it to google??? Do you think we are silly!!
if you buy a camera for $200 and sell it for $300, you’re a scumbag!!
If you are lowering your maximum cpc to get less clicks you will get a lower ctr and therefore your add will have a worse performance score and after a little while rank even lower still then originally predicted. Surely the Adwords Bid Simulator doesn’t take this in to consideration?
Also vice versa if you higher your maximum cpc.
Less numbers / more graphs please.
No they don’t. You haven’t used AdWords before…
Great.
Great site
lol google make more than twice as much profit than you do! ripp off
We’re banging this same drum. If we can get the data dynamically it’s tough to use it comprehensively.
I also worry about Schroedinger’s Cat. If we all look at the same landscape (which is only updated once a day) and react to it, don’t we end up changing the landscape?
Absolutely, you can fold it into the click valuation, but that needs to be done carefully. First, are you considering the lifetime value only for new customers created or for every buying instance. Some keywords may be more likely than others to generate new customers versus repeat customers.
But you’re right, whether you fold it into the efficiency target (losing money) or into the click valuation, you reach the same bid.
I really enjoy and appreciate your videos – your calm, clear, and careful approach is very refreshing and helpful. This and the video on explaining the auction logic are priceless! I am most impressed however by your pointing out that bidding at your CPA is NOT always the way to maximize profit – so often the advice I’ve seem from the other engines is to bid “what a click is worth to you”, which of course maximizes THEIR profit. As usual, Google takes the long-term, sane approach of win-win!
The manual process il almost impossible on thousands of kws. There is a way to get the estimations through API?
If you calculate the average lifetime value of a customer, you can still use the same method as described in this video. Right?