AdWords: Setting Your Max Cost Per Click
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We've received many emails from customers over the past several years asking how high we recommend setting AdWords' max cost per click.Generally, we recommend that our customers set the price somewhere moderately high, between the "base" rate and the max rate suggested by Google. For this entry though, I've decided to discuss a few options that may help you decide where to set your max cost per click to get a maximum return.
What kind of competition do you have?
Before you start, you'll need to do a little experimenting with the keyword tool and traffic estimator to see how high you'll need to bid. If the price to get your ad listed number one, in my opinion, it's a no-brainer. Bid what you need to bid to make sure that you have that number one spot. It will bring you the most visibility and generate the most clicks for your ad. Generally, the higher the ad, the better "quality" your clicks will be as well.
If the cost is relatively low, don't even think about it. Set your ads to be number one and then, if you're working with a limited budget, set your daily max spending limit to a number that is comfortable for you. It's generally better to have fewer clicks of "higher quality" than lots of clicks from "lower quality" traffic.
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