Google AdWords tells you right away if your Maximum Bid for a keyword is too low for your advertisement to show up on the first page of results. On one website I’m currently working with, the keyword that generates by far the most impressions and clicks is one where Google says that I am way below the “first page bid.” My maximum bid is set to $0.30, but Google estimates that I would need to bid $0.70 to get on the first page.
But this keyword is generating tons of clicks and impressions, and my Average Ad Position is 6.3! Not great, but still on the first page.
My guess is that my advertisement gets shown when other bidders’ ad impressions are being metered because of their budget. Or that the specific query works out such that I get shown on the first page. The first page bid is apparently calculated based on the exact match version of the keyword. So a broad match or phrase match may put my ad on the first page where an exact match wouldn’t. For example, the specific keyword in my case probably has a ton of competition as an exact match, because it’s a common phrase. But a specific search query may match my ad better, so I get ranked higher.
In any case, the conclusion is that you absolutely cannot raise your bid just because Google says you are below the first page bid. It may be appropriate in many cases, of course, but as a knee-jerk reaction it is wrong. It goes back to my general warning that you have to avoid the temptation to increase your bids while chasing clicks.
