Bidding the right amount
The amount you bid for a keyword will determine your adverts
prominence on the search results pages relative to other adverts
competing for the same keyword (The success or effectiveness of your
adverts also affects your position, but this can be ignored for the
purposes of this discussion). Obviously, you should never bid more than
you need to, but it is vitally important that your advert be in the top
eight (on the first page), and preferably in the top three or four. If
the sum total of the click-through rates of adverts on the first page is
10%, then the same statistic for the second page will be 1%, the third
page 0.1%, and so on.
Having said this, you should never bid more than you can afford for a
click. It doesn’t help you to spend R100.00 to sell a product that only
nets you R60.00. Once your campaign has been running for a while, you’ll
be able to accurately calculate the how much you are paying in
advertising for a single sale, but to start off with, a general rule of
thumb is never pay more that 1% of the profit you will earn from the
sale of one product, for one click.
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