So I just logged into my adwords account and got a notification that Google will be changing the way the CPC formula works for ad placements for ads that display above the organic results. Straight from Google:
In the current top ad placement formula, we consider your Quality Score and your actual CPC, which is determined in part by the bids of advertisers below you. Even if you have a high quality ad, if advertisers below you are not bidding very much, your actual CPC may not be high enough to qualify your ad to appear in a top position.
With this new formula, instead of considering your actual CPC, we’ll consider your maximum CPC bid, which you control. This means that your ad’s eligibility to be promoted is no longer dependent on the bids of advertisers below you. Therefore, if you have a high quality ad, you now have more control to achieve a top position by increasing your maximum CPC.
Your actual CPC will continue to be determined by the auction, but subject to a minimum price for top spots. The minimum price is based on the quality of your ad and is the minimum amount required for your ad to achieve top placement above Google search results. As always, the higher your ad’s quality, the less you will pay. And you will never be charged more than your maximum CPC bid.
So, even if you’re ranking number one on a keyword, if your bid isn’t high enough, your ad will only show up to the right. I like how I can now have control for it showing up above the organic listings but I don’t like how I have to bid more, even if my ad is the most relevant. I wonder how Google will determine the minimum bid to be placed at the top of the results.
By the way, Google says it will be going into affect in the coming weeks. I wonder how this news will be received and how it will affect my campaigns. This will be interesting.