New Adwords Bidding Tutorial

Last month Google launched its new feature called Bid Simulator (Adwords). Bid simulator basically worked on the guess work with the data from Cost per Click (CPC) bidding roughly estimating the number of bids or click you may get with different CPC bids. Hence it will allow us to play and test different keywords with different bids.

Now how this bid simulator works?
Let us first understand how the current system works. In the current system when you increase your maximum CPC bid for your keyword on search, you are able to get better hits the simple reason behind this is if you pay higher you get higher position in the sponsored listing of your searched page or the higher bid qualifies your ads to appear in the new, more expensive auctions. In this case a advertiser has to decide on the ROI for the given keywords.

The process of deciding the bid is not that simple. There are 2 major factors that an advertiser should take care of 1. Value for Click and 2. Incremental cost for Click.
Now Value for click is the estimated value that you feel is worth for your keyword. And on the other Incremental cost for click is much extra you are currently paying to get higher click. Now in this case if your value for click is higher then incremental cost for click, you should have no trouble increasing your bid to Incremental cost for click and ensure maximum click and hence better ROI. On the other hand you will have to think twice before increasing the bid to incremental cost for click, here you will have to decrease your bid.

To be continued with how to calculate the value for click and incremental cost for click for a particular keyword….

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