What’s the Deal with Min Bid Prices on Google Anyway?

There’s a lot of commotion about what determines your Google minimum bid prices, your ad position, and how building a site compliant with the landing page “quality” score will actually benefit you.

I myself was REALLY confused about this for a long time. I had a chance to discuss this with Perry Marshall, and clarify what’s was what, and what causes what.

Here’s some common misconceptions about minimum bid prices on keywords and the landing page quality score:

1. Google increased bid prices on keywords that are converting in order make more money off of you
2. If Google likes your landing page, it will discount your cost per click by 30% and send you the same amount of traffic, cutting your expenses by almost a 1/3
3. If Google likes your landing page, it will send you WAY more traffic
4. Google targets affiliates, since they want to push them out and play the affiliate game themselves
5. etc etc…

1 & 4 are total BS, 2 & 3 have some truth to them, albeit with a misunderstanding about what Google does if it likes your landing page.

First off, your ad position is NOT determined by landing page quality, but ONLY by CTR times your bid price. Your landing page quality score ONLY effects your minimum bids and nothing else.

So if you want to get cheaper clicks on Google there’s two things you need to do:

1. Improve your Google Ad CTR by split testing two ads at a time. Here’s a great post by Derek Beau on exactly how to do that. If you can double your CTR, you’ll pay 1/2 the cost per click for the same ad position.
2. Get the lowest minimum bids as possible, because if your minimum bid is $5, nothing else matters until you get that down. Below I talk about exactly how Google determines the minimum bid of your keywords. You want to get this right FIRST before you even worry about what your CTR is.

So here we go, there are 3 and (so far) ONLY 3 factors that effect your minimum bids:

1. Google Ad Relevancy - How targeted your Google Ads are to the keywords in your adgroups. The best way to assure you maximize this is to have tightly targeted adgroups with the keyword in the ad at least once. Domain name also plays a factor here, so if you can register a domain name like: www-blue-widgets, if you’re selling blue widgets then that will improve your ad relevancy
2. Landing Page Quality – I’ve talked about this one in depth, your landing page needs to be part of a real site, and have targeted content’s relevant to the keywords in your adgroup. Refer to this post, for more details.
3. Bounce Rate – This may be a real surprised to many of you. Google actually looks at how long visitors are on your site. If too many visitors are hitting the back button right away, Google will slap you with higher min bids. This is why it really pays to have compelling unique content on your site. If your affiliate site looks exactly like everyone elses, what do you think the visitor will do?

I usually don’t do a lot of posts about nitty gritty details like this, however, you REALLY need to know this stuff if you want to succeed at the ppc game.

Adwords can really be overwhelming for a newbie, there’s a lot to it, but the dividends of understanding all the excruciating details are what separate the wannabes from the true blue super affiliates.

The first step of success is knowing all the rules, and mastering the basics.