Hot Tips from The PPC Summit, Day 2
March 4th, 2008 by 
Amit
Today at PPC Summit, we had another round of info packed sessions. This is REALLY great stuff.
I picked up some real gems regarding Google Adwords today :
There’s been a veil of secrecy on Google’s part as to what’s the deal with history?
ACCOUNT HISTORY
There’s been widespread claims in the SEM world that people who have had Google accounts for years have a significant advantage (in terms of lower click costs) over newbies who are just starting out.
Now, one of the presenters actually got some answer out of Google regarding account history, and Google claims is takes only 4 months to overcome the disadvantage of having a new account.
So presumably there’s no benefit between someone who’s had a Google account for 1 year vs 5 years, once you’ve had your account actively running for about 4 months you’re on a level playing field - according to Google.
What sucks is when you first start a new account you could be paying 30%-60% more per click than you otherwise would, just for having a new account!
CAMPAIGN HISTORY
Now many of you have heard that when you first start a new campaign you’ll get high click cost and/or poor ad positions until you’ve build some history.
But how long do you have to build history on a new campaign anyway?
Again, according to Google, in the case of campaign history it takes approximately 2 weeks to build up your history.
So over the first two weeks of building up a campaign expect your traffic to increase and your CPC to drop as your history builds.
There’s keyword history and ad history as well. How fast your keyword history or ad history builds up depends on how much traffic you’re getting.
POSITION NORMALIZATION
Position Normalization? Yeah, sounds like some fancy mathematical term! LOL
Position Normalization was put in place by Google on August 2006, and yet most people have not heard of it.
So what does it mean? It means that Google no longer rewards you JUST for having a high CTR, it’s now ‘normalized for the position.’ So if you’re in position #1 on Google and your CTR is 5%, while most advertisers get 7% CTR in that position, you’ll be penalized, NOT rewarded.
Your CTR only helps as far as it compares to how other advertisers fare in the same ad position.
In the old days you could bid high when you launched your campaign and build up a super high CTR by being in the first position; as a result Google would give you a high quality score. Then you just cut your bid by 75% and your ad would STILL be on the first page thanks to your high quality score.
Guess what? With position normalization this doesn’t work anymore. Unfortunately a lot of people are still aggressively promoting this bogus strategy - totally not their fault, Google slipped position normalization in while no one was looking!
Don’t waste your money by bidding high when launching a campaign - only benefit of biding high now is to build up your ad and keyword history faster - but you don’t have to be in the first position to do this.
I recommend you determine your initial bid as followed:
Assume average conversion rate : 1%=0.01 (5%-10% for pay per lead)
Let’s say you have a commission payout of : $X
I would recommend that you start bidding 1% x $X = 0.01 x $X
Why? Because the Conversion rate times the Commission (affiliate payout) = EPC (earnings per click)
Now if you’re bid = EPC you can expect to break even at this point. Then you can just adjust your bids from there as you collect data.
Now this is just a rule of thumb, but it works well in most cases. It works best if you actually KNOW what your EPC or your conversion rate is for ppc traffic (ask your affiliate manager).
It was SOOO worth paying $1000 to go to the PPC Summit, just for these few tidbits I got on the second day! 
If YOU want to be a super affiliate you have to be absolutely hungry for the knowledge.
I’ve been hungry since day one, and I’m still seeking to take my game to the next level.
account history campaign history position normalization ppc summit
Posted in Google™ AdWords, Industry News | 
Excellent information. Thanks for sharing. Did you happen to catch whether or not pausing a campaign causes it’s history to be reset? It seems as though this was the case in the past, but not so much anymore.
Amit,
That was a great post I was paying 100 percent over my profits when I first launched my campaign now I’m starting to break even almost, but I do notice my bid cost are going down as I keep spending more.
What I do is find all keywords through the adwords editor that have a a ctr rate of 2.0 plus and that has recorded some click data and I start debidding them keywords down, but at the same time ultimately keeping my same position.
That 4 month thing answered my question because I was at the adwords forum the other day asking this question and the adwords rep wouldn’t really give me a direct answer on that…
This blog keeps hitting the spot every time I have a question in my mind it pops up here and I’m right back on track
Amazing info there Amit. A lot of this info is not available elsewhere, and it is, as Anik Singal says, “pure gold”.
Thanks
This is some really valuable information. I never knew Google Adwords is that complex.
Excellent info.! I really like your formula for figuring out a starting bid amount as that always seems to be a challenge for me. Not anymore!
Amit,
I just tried that formula that you said using
I would recommend that you start bidding 1% x $X = 0.01 x $X
I did it and you hit the spot well I’m not going to get into what niche, but I started paying out 2.24 on a new account to maintain good ctr well anyways I used your formula and it came out to 2.25 I did the following below
1% * $15 = 0.15 * 15 = 2.25
well I was bidding 2.24 on the launch of my new campaign and now I’m down 100 percent I’m paying around 1.24 as my account records data and etc….
I’ll be a super affiliate in no time and will start promoting them through organic search
Amit,
I just got to thinking of it and recalculated that formula on something else and it didn’t come out to right I mean really if someone just used adwords editor and set there bids in the right positions and maintain them until they get around 200-300 clicks then start bidding down maybe by 15 percent (depending on the keywords) while keeping the same position that would make more sense…
Because the formula you used above would not come out right on every single market I mean its theory based, so therefore it might work on some things, but I wouldn’t use it as accurate measurement…
and the POSITION NORMALIZATION would fall under the category of your ad copy maybe someone is clicking on that other ad because it catches there eye more maybe that 5 percent ad did not have the keywords in the title, but the 7 percent ad did…
So how would you apply that formula into position normalization?
I think it would make more sense if the ad was more eye catching and relevant to the users search therefore it will result in a higher CTR..
This is last comment, but I don’t see whats so difficult about bidding I mean really it all makes sense you find what keywords convert then use them of course and maintain a decent position why you decrease your bid amount over time, but at the same time ultimately keeping the same position.
I mean whats so hard about that?
Thats what I been doing and its starting to work?
Tyler Dewitt, I don’t understand why your bid is 2.25??
If commission = $15, then 1% * $15 = 0.15, so initial bid must be 0.15! Your EPC is 0.15
You wrote 1% * $15 = 0.15 * 15 = 2.25 Why you multiply 0.15 and 15 ?
The only bad part is history doesn’t mean much when google changes its QS algorithm….
Amit,
I also have the same question as Brent. Does pausing a campaign or letting your account sit empty without any funds in it cause the history to refresh?
Thanks,
Debby
Debby,
When you pause a campaign it just sets at a pause position you won’t lose your data or anything like that, so for example you could put 500 into your campaign one month to help build up your history and then pause it until you get more money to put into it and eventually you will be able to let it run all the time when you start profiting…
Its pretty simple
Thanks Tyler!
Roman,
What do you mean?
The reason I wrote it like that for is because thats how Amit had it worded above.
1% x $X = 0.01 x $X
I would imagine he is doing that formula like this
(1% x $X = 0.01) x $X
With X being the Commission…
I mean
(1% x $X) x $X
Tyler,
That answer is good, but it doesn’t apply to what Amit is discussing. What Amit is discussing. What my question was is a build-up of history in a campaign as it relates to CPC. (I’m replying only because Debbie said her question was the same as mine.)
I’m wondering if a campaign that has already built up a campagin history enough to bring down CPC prices is paused, when it is unpaused, is the CPC history still there or is it treated as though it is a new campaign (again, CPC-wise).
-Brent
Roman,
Regardless you can’t go by that if you have a new account. Theres no way you will get 15 cent clicks on a new account well depending on the niche and what your using such as Adwords, MSN Adcenter, and Yahoo Publisher.
Adwords will always have the highest clicks because its a more competitive market, but if you launce new account on adwords the chances of your paying 0.15 cents a click is rare most generally on a new account you have to pay out super high and lose money before you start to break even then as you break even you can start to profit (by bidding down certain keywords).
For example you hold number 3 position with an AVR. CTR of 2 percent well after time goes by you can download all your adwords data through adwords editor and then bid down 15 percent (using 15 percent as an example do whats most fit and works) while you keep the same position through adwords because when the account is new you have to build up your history or even and the same thing goes for when your promoting a new offer with a new keyword list you go to collect data first..
Its been working for me…
I have also ranked keywords like printing, website design, and etc its all search marketing I mean basic common sense
Thats how I do it I just go by whats working and go from there.
Debby,
Why is that what you had in thought was putting a little bit of money into it at a time?
If so that will work because like Amit was saying people that have accounts that have been running for 4 years won’t make a difference just make sure you keep your CTR up and use good converting keywords and just keep pulling your ads in there.
Its all about leveraging and knowing how to bid I launched a campaign the other day and started profiting right off the bat well about 2 weeks ago and never even used adwords I’m just very famaliar with how the whole search results work in general for example I can set here and think of what keywords convert with out even using a conversion tracking tool which I would highly suggest using one like Amit has mentioned, but the only reason I can think like that is because I am so use to using organic search and its very hard to identify what keywords are converting on there, but back to what I was saying I launched a campaign the other day and it started profiting right off the bat until Google came and slapped my Bid prices.
After Google slapped my bid prices I started bidding high and then got my QS back up to great and ok and was paying out 2.40 I was literally paying out 100 percent more then what I was making back, but as you keep paying and putting money into it over time you can start to bid down and start to profit.
Some campaigns will profit right off the bat, but most generally if your launching a campaign thats going to make serious money and you want to drive a lot of traffic to it from more competitive keywords and some ok long tails your going to have to spend more in the beginning stages from my experiences anyways.
The good thing is with adwords after you find out what keywords convert you can then optimize them same keywords for organic search therefore your scaling the process.
Its all makes sense…
Tyler,
I have an Adwords account that has been sitting without any funds in it. I was wondering if that will cause me to start the process over again?
~Debby
Brent,
When you pause a campaign you don’t lose your data the only reason you would lose your data or it being reset is that Google is manually editing your scores.
The biggest kept secret in the adwords game is that if your quality scores are getting smacked or reset its because its being humanly edited.
Google has employees that watch your accounts a *lot* specially on new accounts or if they notice your account is changing around a lot like launching new campaigns and simile things to that…
Actually Shoemoney told me about that, but if you really think about it you can tell Google is manually reviewing your account a *lot*
Debby,
Nope if you pause it you will still have your data there thats what I was saying…
Your data will only get reset if Google manually reviews it and slaps your scores.
Debby,
So if your account balance runs out and your campaign stops that has nothing to do with your data being reset.
Tyler,
Dude sorry but you are way off topic. The topic is account history/ campaign history as it relates to CPC (Cost-per-click). I’m well aware that pausing my campaign doesn’t result in it’s data being deleted LOL. This entire blog post is all about CPC. You are going on about quality score ..yada yada. Amit is talking about CPC and account history, nothing else.
-Brent
Brent,
You stated the following below…
“I’m wondering if a campaign that has already built up a campagin history enough to bring down CPC prices is paused, when it is unpaused, is the CPC history still there or is it treated as though it is a new campaign (again, CPC-wise).”
Brent,
Also everything I stated correlates with this topic, it only makes sense…
I mean really
Brent,
I see what you was thinking on why you think I was talking off topic if you read that cleary and combined the concepts I’m talking about you’ll know exactly what I’m talking about..
Put two and two together…
Adwords is like science
Tyler,
I know what YOU are talking about, but this is Amit’s blog post and what he is discussing is campaign/account history and how it affects CPC. Of course, yeah, there are many factors that play into minimum CPC, but this post is about how account history affects CPC, not about Google employees watching accounts or quality score etc. That stuff has all been hashed through aroung the web 1000 times. The stuff Amit posted is new knowledge to most and so it’s be nice stay on topic with this new information.
-Brent
Thanks for sharing that info Amit, Good to know that show is worth attending!
Tyler, I understand that $0.15 bid is harder to get. But let’s take a look at this CPC again.
Your commission is $15 for order. If your conversion rate is 1% it’s mean that you must have 100 clicks to have a single order, if your bid is 2.24, you must spend $224 to get one sale. So your will loose $224 - $15 = $209. After some time your bid dropped to $1,24! If conversion rate is the same 1%, you must spend $124 to get one sale which will bring to you $15 commission. So now you still loose money: $124 - $15 = $109!
I think $0.15 bid is maximum bid which I can setup if I don’t want to loose money. When I want profit, bid must be lower then $0.15, when conversion rate (1%) and commissions ($15) are constant.
Or I’m wrong?
P.S English is not my native language, but I think you understand me
Roman,
I already knew all of the information that you posted but never really put it together like that. That was definitely a light bulb moment for me. Thanks for spelling it out for me! HA!
~Debby
I’m sorry
Not loose, but lose 
Roman,
My conversion ratio is actually higher then that, but thats besides the point the point is you will lose money on a new account most generally you will sometimes you can lose 1000’s of dollars when you start a new account with new keywords your looking at it from the wrong angle.
The bottom line is you will lose money in the beginning stages well I wouldn’t say lose, but your not going to throw a campaign up and start profiting right off the bat on a new account with a new keyword list if thats the case then I’d like to see that, but the chances of that happening are rare because in the beginning stages you are building up your history while bidding down.
Anyways enough of that I think I let the cat out of the bag enough there…
Roman,
I reread what you said and yes you are wrong chances of you making any money or getting any clicks at all are next to none the idea is to bid high in the beginning stages with a good placement that is getting good CTR even if your losing money, but at the same time ultimately bidding down while maintaining the same position then eventually you will hit the profit state…
See your looking at it like I’m going to throw a campaign up and starting profiting right off the bat with out investing money in the beginning stages it just don’t work like that specially when using new keyword list.
Thats the biggest problem with people trying to make money they don’t understand they have to invest, invest, and invest before they start to make money the same thing is with organic search people want rankings and want traffic, but they don’t want to invest any money into it, it just makes no sense to me….
Anyways its pretty much common sense…
1. find what keywords convert
2. maintain good position with good CTR even if your losing money in the beginning stages.
3. after you have collected data start bidding down until you hit a profit state
I mean how hard is that?
Also your really not losing money in the beginning stages your investing, but guess what your investing into?
1. Building history up with CTR, so therefore you can get lower click cost.
2. Your findind out what keywords convert.
If your really good you can tell what keywords convert with out even using a keyword conversion code like a lot of arbitrage marketers do where they profit off the market imbalance by combing multiple adwords ads on landing pages.
Besides the pieces of information mention above - who would you recommend PPCSummit to really?
There are two Post It notes affixed to my monitor.
One is my daily revenue goal.
The other is “Read Amit”.
For anyone who is confused by Tyler’s posts for starting bids, he’s not using Amit’s formula correctly. Roman is right, a 1% conversion rate and a $15 commission gives a starting bid of $0.15.
There may also be some confusion about the term “EPC”. Amit uses this as earnings per click. But networks like CJ define EPC as earnings per hundred clicks. So if CJ showed a merchant with a EPC of $40, your beginning bid would be $40/100 or $0.40.