Google’s advertising concept simple yet quite ingenuous, if you bid on a keyword that does not have any competition you will have to pay a minimum of $0.01 for that ad to be published.

For your ads to show on Google's Display Network, your maximum cost-per-click (CPC) bid must equal or exceed your currency's minimum CPC, which is approximately equivalent to US $0.01. To find the exact minimum CPC in your currency, visit the Account Fees and Payment Options page.

The Google Search network publishes at most 11 ads in a single search result, 8 on the right column and at most 3 ads in the quality score area. Now due to a specific criteria that is used to calculate the quality score and to select the ads that can be published in this area, we will not be seeing ads published permanently here, so let’s focus on the right column ad section; In theory if a keywords is only being bided by 7 clients, the 8th client will only pay the minimum CPC of 0.01$ to appear in the last position of the right column ad area.

Naturally if the objective is to appear in a more prominent area of the ad area the 8th will have to “fight” his way into the desired positions by increasing the CPC and hopping the competition does not do the same.

This is Google’s advertising concept, and its this very business logic that has helped so many small business strive and shoulder with large corporations with huge advertising budgets. For a moment consider that you are bidding for the keyword: “azulejos” that is consistently returning 4 results on the right and one on the quality score. Even assuming that the site in the quality score position is moved to the right, we still have three available spots without any competition. Awesome, an 0.01$ advertising spot right?

 Not quite…remove the zeroes on the left and maybe…just maybe you might that last VACANT spot.

Here is an excerpt of a reply to a client that raised the issue in Google Help Center:

Google would actually rather show no ads at all than to show ads not likely to provide a good user experience. The AdWords system was designed from the ground up to protect this user experience by providing many checks and balances, and AdWords might most accurately be thought of as quality based advertising. All that said, please know that the first page bid estimate for a keyword is not highly related to how many (or how few) competitors an advertiser has for the keyword. Instead, minimum bid is more heavily related to the Quality Score of the keyword as it is used in an individual advertiser's account.

By the way, when you encounter keywords for which there are no (or very few) competitors, it does not necessarily mean that no one has thought of using that keyword and it is thus a great opportunity to advertise cheaply. In fact it often means just the opposite: that the advertisers who have used it in the past have found it difficult to keep it running affordably (due perhaps to a lack of 'commercial intent' on the part of those searching on the keyword) and have decided to stop using it.

http://www.google.com/support/forum/p/AdWords/thread?tid=3452bff68df2b737&hl=en So let me get this straight…

1. If you find a keyword without any competition it means that advertisers who have bided on it in the past found it to be a poor investment, so they stopped bidding on it and Google made the natural thing… lowered…on no wait… RAISED the minimum cp of that keyword. Wait a minute… so if it’s a bad investment and no one is buying it the market makes it even more expensive to detract potential investment…right…

2. If the Quality Score is dictating the minimum CPC, and if you took care of the relevancy of your keyword VS ad copy VS the actual landing page/site, why is Google enforcing you minimum CPCs based supposedly on the historic performance data of that keyword? And again, if its not performing, why increase the CPC? It simply does not make sense in a business sense…oh wait… it does… on Google’s business sense.

Why doesn’t Google simple put all the cards on the table and stop hiding behind complex algorithms that determine the price that we have to pay for a service? It’s a method that has worked in commerce for 2000 years; you have a service to provide, you state the terms of the service and if I agree to them, I will pay you the agreed amount. No where in the process do I have to pay an undisclosed fee that depends on what salesman's undisclosed data thinks I should pay.

It’s been a while I know, so yes, this is a rant post, so please bare with me… Now, one would think that a company that generates 23.651 billion in gross revenue per month, that does not need to allocate time to attending their clients requests (most of the support requests are handled by automated systems), would at least take the time to get the most basic feature working on their website and that coincidently is responsible for bringing all of the revenue in! Don’t hide our god damn ads Google! For god’s / Sergey’s / Eric’s / Lawence’s sake!