High CPC is very often a sign of junk traffic.

[snoopy]

Thought I would have a little rant about CTR figures often used by domineers & sales venues to justify values.

Every second domain up for sale or appraisal is an example of this,

eg yesterday's drop,

GlobalBusiness.com.au global business 170 $4.24
6DegreesOfSeparation.com.au 6 degrees of separation 480 $1.10
Spew.com.au spew 320 $1.36

Other recently discussed domains

sydney.com.au 74,000 $1.75
hobart.com.au 9,900 $1.03

…and pretty much every other geo domain aside from near pure tourist locations.

These high CPC aren't due to advertiser bidding, they are closer to a penalty applied by Google due to extremely poor past CTR's on those keywords. If the CTR is low enough Google is basically saying to advertisers,

Your advertising isn't working, you might as well be selling herbal viagra on this term, if you want to continue your mainly unrelated advertising on "spew" it will cost you $1.36/click.

The end result: nobody advertises and there are no irrelevant ads. Similar story for something like Sydney, everyone who has ever tried to make money advertising on the term in Google has done badly, hence the high CPC and no advertisers.

 

[ScottNugent]

Nice post snoopy

I think the best rule here is common sense.

-Does the domain sound natural?
-Is it something you can see yourself searching?
-Would you pay to have advertising on this domain if you were a big company CEO?

 

[Drop.com.au]

Very good post Snoopy.

So for bulk checking, the key indicator on these Google "Penalty rates" would be Low competition, I'm assuming.

Andrew

 

[snoopy]

Very good post Snoopy.

So for bulk checking, the key indicator on these Google "Penalty rates" would be Low competition, I'm assuming.

Andrew

Yes, definitely. High CPC + low competition is going to mean a lousy keyword in the majority of instances I think.

 

[findtim]

well presented snoopy, i often see a lot of money being wasted via incorrect monitoring of adwords campaigns and one of the worst offenders right now are YP conning SMB's

(yellow)

tim

 

[findtim]

the key indicator on these Google "Penalty rates" would be Low competition, I'm assuming.

Andrew

not hijacking just answering....

i don't think its low competition its low CTR thus google isn't making much money from you so they say "well if we are only getting 1 click a day off herbal viagra then lets charge $4 bucks for it.

does everybody know that the person who ranks number 1 on google adwords may NOT being paying more to achieve that, they might just have a better CTR. research "quality score"

tim

 

[Drop.com.au]

not hijacking just answering....

i don't think its low competition its low CTR thus google isn't making much money from you so they say "well if we are only getting 1 click a day off herbal viagra then lets charge $4 bucks for it.

does everybody know that the person who ranks number 1 on google adwords may NOT being paying more to achieve that, they might just have a better CTR. research "quality score"

tim

Hi Tim,

Understood. I was referring to the competition data in GAKT as a flag for screening this type of domain.

Andrew

 

[snoopy]

does everybody know that the person who ranks number 1 on google adwords may NOT being paying more to achieve that, they might just have a better CTR. research "quality score"

tim

The person at no.1 will be paying the most in almost all situations. Adwords ranks almost entirely on the basis of CPM, the person who is overall willing to pay the most money for an impression will have the top position (the exceptions are minor). Everything else is a smokescreen, a way of presenting things so it is more appealing to advertisers.

 

[findtim]

The person at no.1 will be paying the most in almost all situations. Adwords ranks almost entirely on the basis of CPM, the person who is overall willing to pay the most money for an impression will have the top position (the exceptions are minor). Everything else is a smokescreen, a way of presenting things so it is more appealing to advertisers.

so you are saying quality score is a myth?

this year i have done small campaigns clients which we did split testing from another google account and it clearly showed that we didn't change our CPC and the higher CTR ad ranked higher, yes it flipped around a bit but we were still paying less for a better preforming ad.

it also was in quite a highly contested search term @ $2.50 a click, 3 adwords at the top and 8 down the right side.

i think its a bit weird that if quality score isn't true or only rare that my little ol ads got picked to be the rare ones?

CTR was @ 1-2% which i think is pretty good

tim

 

[snoopy]

so you are saying quality score is a myth?

I'm saying it is a meaningless number in terms of how much money people pay. Google reduces CPC as quality score goes up but that is offset by the increased cost of receiving extra clicks. Other than CPM everything else sums to zero.

this year i have done small campaigns clients which we did split testing from another google account and it clearly showed that we didn't change our CPC and the higher CTR ad ranked higher

This is roughly how googles system works,

Two advertisers
Advertiser A - figures out that with a 10% CTR they get top spot for $10 clicks.
Advertiser B - figures out that with 20% CTR they get top spot for $5 clicks.

For google they are both the same, the cost of 1000 impressions is $1000, regardless of CTR, regardless of quality score, regardless of anything. Pay the most money overall per impression and you get top spot. The exceptions to this are very minor (basically penalties for poor quality landing pages, or irrelevant ads as discussed at the start of this thread).

All quality score is really about is trying to get advertisers to be more competitive. ie improve your ad and maybe you will be able to justify the $1000 CPM for top spot. Telling them it is on performance and "CPC" is a lot more palatable though.

 

[DavidL]

No that's not right, snoopy.

You're saying QS (or simplifying it, CTR) is meaningless for an advertiser. However in your example, Advertiser B, who has worked hard to optimise, is spending half as much for each visitor. That's a huge difference to the bottom line.

Or have I misunderstood?

 

[findtim]

Pay the most money overall per impression and you get top spot.

i agree with most of what you say but i know from actually doing it that sometimes i can't get to number 1 on adwords no matter what i am prepared to pay, i've even put in that i will pay $20 a click on something that is averaging $2 a click and i still don't get to number 1.

the ad is good, the landing page is sound and in the test i was doing i had the ad linking to the homepage where the homepage was ranked number 1 organic so google had proved its quality and to this day it ranks number 1 organic.

the businesses i was up against had been advertising in that space for over 2 years so they had cred and i think thats what was stopping me from pushing them out, thus they had an established quality score IMO

tim

 

[snoopy]

the ad is good, the landing page is sound and in the test i was doing i had the ad linking to the homepage where the homepage was ranked number 1 organic so google had proved its quality and to this day it ranks number 1 organic.

the businesses i was up against had been advertising in that space for over 2 years so they had cred and i think thats what was stopping me from pushing them out, thus they had an established quality score IMO

tim

Quality score can go to 9 or 10 on the basis of a couple of clicks.

On what basis did you conclude your ad was good?

 

[snoopy]

No that's not right, snoopy.

You're saying QS (or simplifying it, CTR) is meaningless for an advertiser. However in your example, Advertiser B, who has worked hard to optimise, is spending half as much for each visitor. That's a huge difference to the bottom line.

Or have I misunderstood?

I'm talking about how google ranks advertisers, not how advertisers make a profit. If someone produces a better ad, increases quality score, reduces cpc and increases ctr all that sums to is a ctr increase, everything else is just noise. The ad is better so more click through, it is still cpm, the cost of the position is exactly the same dollar amount. They can make more money but it boils down to better use of the spot they are already paying for.

 

[findtim]

Quality score can go to 9 or 10 on the basis of a couple of clicks.

On what basis did you conclude your ad was good?

i copied an advert word for word just changed 1 word, that ad has been the top ranking ad in a different sector for over a year, so i figured it was proven, as i had a similar proposition and wasn't competiting against them.

tim

 

[snoopy]

i copied an advert word for word just changed 1 word, that ad has been the top ranking ad in a different sector for over a year, so i figured it was proven, as i had a similar proposition and wasn't competiting against them.

tim

In a different sector? My guess is the ad wasn't good. Writing a really good ad takes dozens, sometimes hundreds of attempts, it is extremely involved, not just a cut and paste from another industry.