Adwords Bid Price Discrepancy between Shorttail and Longtail: Is it Normal? Why?

[g1c9]

Hey all,

I haven't used adwords in years and thought I'd try an ad for a lead gen offer (original lander/exclusive with small business) just to see if the cost/lead could compare with another traffic source which recently became more expensive.

Market: BW (which stands for Blue Widgets but is called BW casually)

What I noticed, and am curious about... GKWT reports:

• CPC for "BW" is $20-$50.. First off - obviously no one is paying 20-50 per click (right?)... what does this number really mean?
• CPC for "blue widgets experts" is as low as ten cents... Why is there such a ridiculous price difference between these seemingly similar terms.. Neither are buying keywords but rather are just general keyphrases.

Thanks for your time and assistance in advance... Links to basic adwords material is welcomed if these questions are that dumb.

 

[AllBizNiz]

Here's a video you should watch on how the Google auction system works. It's pretty good. your blue widget experts is low cause there's nobody bidding on it.

http://www.youtube.com/watch?v=K7l0a2PVhPQ

 

[g1c9]

Thank you very much - I'll watch all of these videos and then come back.

 

[g1c9]

So is the reported CPC just the highest bid by a long shot? Or are advertisers actually paying upwards of 10-20$ per click?

Video cliffnotes for interested parties:

Ad Rank = Bid * Quality Score (higher number = better position)
you pay the bid of the advertiser bidding below you. you never pay your max. you only pay what “beats” (or matches?) the competition
#1’s Actual Bid Price = (#2’s Ad Rank) / (#1’s Quality Score)

Ad Quality Score

Biggest components (descending)
CTR by far (~60%). Users vote with their clicks.
Relevancy (~30%)
LP Quality (~10%)
relevant, original, easily accessible content
easily navigable
quick load times
minimal popups and popunders.
transparency
esp. regarding use of visitor’s information

 

[AllBizNiz]

Yeah. It's in their best interest to display the highest bidder to make the other advertisers bid high even know #2 may be below that. Just need to test to see where the sweet spot is. That was a pretty sweet video. Thanks for putting up some cliffnotes for everybody.