How to set an appropriate Adwords max CPC?

[TKIGWebTeam]

How do you gauge setting your initial max cost-per-click for specific keywords?

For example, you have a keyword that has an estimated "first page bid" at $6.25. If you are wanted your ad to show competitively with your competition, how much should you start at? Two times the "first page bid?" Three times?

I'm working on revamping some ad campaigns to help with our paid marketing expenses. I do have quite a budget to work at, but we are hoping to cut down some of this cost. We just spent the past few months trying to spend our way out of some poor quality scores and CTR's. Our metrics have improved drastically, now I want try and cut down our CPC, which is over $19! Our ROI is hard to calculate due to the fact that it can take a few years to obtain profit from the market we are in. Our conversion rates are over 9% from paid advertisement to leads (which is pretty decent for our market).

I am all eyes and ears on this subject... I am ready to start playing around with prices tomorrow to see how we fare, in hopes I get some solid responses before then.

Thanks in advance!

[TKIGWebTeam]

This is another great suggestion and YES I do this on a weekly basis. IMO, your answer fits right in with the discussion.

I usually like to pull my full reports from AWStats from within the server. I then "weed" out certain words that should be within my negative campaigns and find others that may be worth running.

[KeriMorgret]

It's one step away from your question, but have you looked at your search query report recently, to see the actual keywords people are using? If you can raise your CTR by getting rid of irrelevant impressions, you can hopefully lower your CPC, and also avoid paying for some off-target clicks.

[TKIGWebTeam]

Lol. No worries! Always reply with great responses. Never know who may be looking for that answer as well.

Right now, we are not running location specific campaigns. Only nationwide 24/7. Haven't had the time to really "fine tune" this account due to the massive amount of keywords, landing pages and ads running already.

Job security maybe?

[RyanPurkey]

Totally.  Sorry if I sounded too generic but it's always difficult to figure out the back story on someone's question.  It sounds like you're doing all the right things.  You're likely doing location specific and day parting as well where applicable.

[TKIGWebTeam]

Excellent information and well put together answer!

I don't want to take away from it, but I have already done all of my homework (as you have already suggested above). I was merely searching for a modest starting point at cutting down our CPC to a certain extent.

I would have to imagine I have answered my own question while asking it. I need to simply adjust my pricing (decrease max CPC) till I feel satisfied with our positioning and our conversion rates.

[RyanPurkey]

First, I'd spend a little extra time on getting at the value of your leads, if at all possible as this is a key component of answering your own question.  Perhaps you can find that number in generalized industry data, or you can extrapolate from what you currently have.

Next I'd begin breaking the high cost CPC keywords into their own very specific ad groups and/or campaigns so that you have maximum control over the ads running, split testing, and placement.

After that I'd begin lowering bids until I'm in the 2nd or 3rd place slot and then split test ad titles and descriptions to find my sweet spot, as well as continuing to run conversion tests on the landing pages.  At the same time I'd be looking for content placements on highly applicable sites and see if I could find some markets where I'm plugging in to my target demographic but at a lower cost than search.

Finally, lather, rinse, repeat.  Keep working the system to increase current lead/sales volumes while decreasing costs.

But to answer your first question, typically I aim high at the beginning in cost and then work my way down with the price as the data comes in.

[DavidKonigsberg]

use http://www.semrush.com/ to get ideas of cpc prices - but i normally just start first page page bid or low then watch positioning