Comments on: The Google AdWords Trap: Chances Are You’re Paying Too Much for Your Google AdWords Clicks

By: Alan Mitchell

Alan Mitchell — Thu, 27 Dec 2012 18:40:07 +0000

In reply to Paul.

Hi Paul,

The average CPC in scenario 3 can be anywhere between the $0.30 CPC in scenario 1 and the $0.70 CPC in scenario 2, with any amount between $0.30 – $0.70 resulting in the same outcome of lower profit for advertisers, and higher profit for Google.

The actual CPC value for keyword 1+2 will depend on the relative click volume for keywords 1 and 2. So if keyword 1 has considerably more click volume than keyword 2, the average CPC when grouping 1 and 2 together will be closer to keyword 1 ($0.30). Similarly, if keyword 2 has considerably more click volume than keyword 1, the average CPC of both keywords together will be skewed and weighted towards keyword 2.

So the average CPC of $0.60 I used in scenario 3 suggests that keyword 2 (CPC of $0.70) has a higher click volume than keyword 1 (CPC of $0.30), hence the combined CPC of $0.60 being closer to $0.70 than to $0.30.

You can choose any CPC amount between $0.30 – $0.70, and the end result will be the same (albeit with slightly different numbers).

Cheers,
Alan

By: Paul

Paul — Wed, 19 Dec 2012 16:48:51 +0000

Alan,
Great post and this reinforces my logic on keyword funneling. One question – where did you get the $.60 average CPC (scenario 3) from?

By: Sean Mc Namee

Sean Mc Namee — Wed, 19 Dec 2012 06:30:29 +0000

Excellent article Alan, huge amount of detail there. I’ve been staying away from PPC advertising because as you point out it can be a deep hole that I can’t afford to fill!

By: Shawn

Shawn — Tue, 18 Dec 2012 15:22:34 +0000

Great post. I have yet to set up a big campaign myself but I have bookmarked this to keep in mind when the time comes next spring.