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Managing AdWords - Handy Hints 
By: Kirt Christensen
When your ad is relevant searchers gravitate to you. The secret to successful AdWords is relevance. Searchers will click on your ad when you have relevance. When you have relevance, your profits will grow because your ad costs dropped, because Google definitely rewards relevance.
Arrogance falls by the wayside when you are shelling out the money, taking risks with your business and Google is dipping into your credit limit every month. Searchers don't want to deal with your arrogance either. This story is revealed best in the management of Google AdWords. When it is your card being charged, the information telling you what does or does not get clicks, is in urgent demand.
Google Rewards You For Relevance
Traditionally, you get higher positions on the search page by bidding more. But when your clickthrough rate goes up, Google actually gives you better positioning without charging you more per click. It rewards you for being relevant.
Essentially, the top position has always been awarded to the person with the high bid. But with this twist, here is the formula that has been used by Google to determine the order that the ads come in:
Your Relative Position = Your Bid Price x Your Clickthrough Rate
To explain more exactly, the formula takes your bid price and multiplies it by your Quality Score. Either way you do it besides your bid price your click through rate has the greatest impact on your position.
Next question: Which CTR are we talking about? We are not talking about, the total ad group CTR, nor the CTR of any of your ads either in the search partners or in adsense. We are talking about the Click-Through-Rate of the individual keywords, their performance on Google alone.
If you are getting a good CTR, you won't be required to have as high a bid for a good position. It works like this; I bid one dollar and the ad gets a click through rate of one percent, and your ad gets a click through rate of two percent. You will be able to get about the same position as I do with only a bid of 50 cents. With a 51 cent bid you will get a higher position than I have. Say you already have top position, Google will charge you a lower bid price as your click through rate improves, without you having to do anything. Nice!
It may seem like some magic formula but it's not. What it means to you is that you are paying out less money to Google each month and that is money in the bank!
Article Source: http://www.uberarticles.com/articles
Need to optimize or "fix" your Adwords & PPC campaigns? Kirt Christensen manages over $600k in PPC spending & knows what it takes to make your account hum! When it comes to adwords pay per click, he's the man!
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