What's smart on Google Smart Pricing.....

I'm running a Google AdWords campaign to promote our dive center software . Now i first set the cpc on 10 cents. If you type any dive shop software related keyword, my ad will show because there is zero competition on the market. At least not at AdWords. I possess the only ads in this whole category. That's cool because there is no better analytic tool than to see each and every search for dive resort software or whatever you'd like to call it. I can see exactly how many people are searching for my product every month without paying more than a buck a month.

The smart pricing from Google though is so smart to raise my bid price on daily bases now. Even though that i have no competition whatsoever for those key word phrases, i have to pay more every day. To still show my ads I'm up to 30 cents by now.
So Google is the smart one, they know exactly what they are doing. Showing ads in any case, even if there is no competition at all, will get more expensive by the day until one gives up and withdraws the campaign, if there are no clicks on the ads.

That means that such campaigns can run on timely bases to study a market's development but have to be withdrawn soon, if not to risk that people start clicking on the links when the price is up high. Still it can be a useful tool.

Wow, I had no idea that Adwords bids could be changed by Google like that. Seems like if you are the only bidder you should be able to bid the minimum, have premium placement, and have it stay at that price until someone else decides to compete against you.

Can't see where they think it's in their best interest to drive advertisers out of the market. Better to get a 10 cents a click then nothing. Then again, what do I know, I'm just a little guy who could never hope to make in my lifetime what the Google machine most likely makes every day.

me, im thru dissecting how Google works since i always end up being more confused than before.

Smart pricing is actually cool. Google determines if your ad is good and gets clicked on a lot and if so, your ads get cheaper. But the algorithm was not developed to exploit Google as a marketing research tool like i just do.

The exact same reason my ads get cheaper with better ctr, kills my research tool after a while because of the smart pricing going up. If though the marketing strategy improves during the time of the research you'll start making sales. If you don't get clicks and you don't make sales, it's time to pause the campaign and try again in a couple of month to see if the user demand has changed.

I think I missed something. Are you saying that with smart pricing if you run an effective campaign that garners a decent amount of clicks your price goes down? And that if you run an ad that does not get clicked it goes up in price?

Do you think they are factoring in impressions at all in that concept? Seems like I could have a very effective ad for a targeted niche that only gets a few searches - would I be smart-priced up then?

I see the cleverness of using this to get some accurate statistics right from Google. I wonder if you intentionally created a crappy ad if you could extend the reporting period that you could afford as people would be less likely to click your ad?

You got the first part right. That is what smart pricing is all about.

That is exactly what will happen. As longer you run your ad and as lower your ctr goes, as higher the price goes up. Let me shortly explain why. Google not only needs happy Adsense publishers but also happy Adwords advertisers PLUS happy searchers for their concept to work. In this case i cannot tell you how long your ad will be shown for a low price.


If the add is crappy is determined due to the amount of impressions and the amount of clicks = CTR. - Google than tells you to either make your ad better or set a higher price. But that is just about the only reference to the existence of smart pricing on Google.
The not so funny part is that you have to check not only each campaign but all the ads as well to find out if your keywords are still active. In case you run many campaigns that can be painstaking work. A nice little rose box in the dashbord with a summary of inactive keywords would be nice and helpful. If you can memorize the amount of impressions on each campaign, you can see when the campaign gets stuck and check it out. If you have many campaigns make a screenshot for reference, that saves a lot of time.

I guess that Google is well aware of the market research possibilities here and does not intend to play the right cards in this this direction. Using this opportunity is not against any Google rules though. It's just a bit time limited. But i think you'll have enough time to determine if your niche is worth looking into. If you find your ad price going up high and you don't make enough sales to cover the costs, it's time to go for a different product anyways.

Just in my case i'm stuck with the product since it is my own software   ;) that's why i mentioned to pause a campaign if the price goes up and try again later. When i ran this same campaign a year ago the impression and the clicks where about on 10% of today. So i could physically see the market develop.  So a campaign what didn't bring any sales a year ago, now just works fine. The demand though is still low, so my CPC still goes up and Google catches a fair share of my income. That's how it works.

A little update:

I'm just coming from my Google account where i found three of my keyword phrases inactive. the campaign is only three days old, the key phrases are 'dive shop manager' 'dive resort software' and 'software for dive resorts'. Obviously I'm the only bidder on those phrases and still my CPC goes up to 15 cents minimum.

Another campaign that has been running for about 2 weeks was ready to get paused. The CPC went up to 40 - 50 cents without the slightest competition in sight. I still got a vital insight on the market though for a total cost of 1.78 in two weeks. I think that's bearable.
At my findings, Google let's you peak sneak into a market for little to no money, if you have success, Google makes money, the publishers are happy, if you don't succeed Google puts your CPC as high as it takes for you to give up and make space for ads that eventually make money. And that's the way the third point is covered as well. The searchers are happy now too, because they get relevant ads to click on. Simple and very effective.

Besides competition your advertisement should have a good CTR too. That's why you are paying more.

Correct me if I'm wrong, but wouldn't an ad that was smart-priced for lack of clicks maybe also indicate a topic that would be easy to rank well for with some good content and SEO?

While it may be an indicator of a topic that is not often searched for, it could also be a way to control a niche, however small it might be.

If you don't mind a bit of a business suggestion, I'm not sure if I was a dive shop owner that I would even think there was software out there just for my type of business. It sounds like a great product and one that I can imagine would be cheaper than most of the more generic COTS stuff most dive shop owners are probably making due with.

Exactly, that is what i was trying to explain. If you type any dive center software related keyword into Google you will find about 5 -7 results on the first page referring to DiveShopManager.


Right, that's why i suggested to pause a campaign if it gets to expensive. A product that is not making sales today might well be a top seller in six month. The customer demand is changing at the same speed as the rest of Internet marketing.


You are totally right, tat is why i run Google ads in the first place.

• One campaign has only dive shop software related keywords. That is the campaign that shows me the demand since the number of impressions matches the number of times someone was actually searching for one of those keywords.
• Another campaign has dive center related keywords. That shows my ads to another group of scuba divers or people who search for a dive center for several reasons. Diving courses, fun diving or jobs in the diving industry. (e.g. Manager jobs)
• A third campaign with 'scuba diving' keywords targets actually everybody searching for anything scuba diving related, e.g. diving equipment, jobs,courses,dive sites etc. Now that is the actual "Spread the Word" campaign.

I actually miss the business suggestion you offered. I'm all ears for new ideas. After 3 and a half years of development i wouldn't mind selling some more copies.  ;)

I don't know how much expertise you have with the running of a dive shop but I wonder if you could bring folks to your site with "how to" type articles dealing with various problems/issues related to that type of business. It's a bit hard for me to suggest specific topics as I have no background...but...something like "How to keep your divemaster from leaving", "How to store your tanks", "How to keep track of your students progress", "How to turn your diving expertise into a business", "How to protect your business from water damage (computerized records are much easier to backup and store off-site and out of a hurricane/cyclone zone)" etc.

(The articles on my writing and business consulting site bring in much more traffic than my core content/sales pages do. Something that I imagine would be the case with most sites selling a product or service in a competitive industry.)

What are the specific problems that dive shops have that gave you the idea to build the software in the first place?

I would try to make the articles with only limited mentions of your software. Subtle mentions rather than in your face - after all, the articles will be on your site and the banners will clearly indicate you sell the software. Focus on the keyword part of the "How to..." statements.

Along with the more generic articles, perhaps a case study or two. Have an article about one of the dive shops already using your software. Talk about time and cost savings. Did they do it by hand before? Were they making do with Quickbooks? Did they have half their records in one place and the other half somewhere else? Did anyone lose licensing/accreditations/whatever because their previous records were such a mess?

One last idea before I have to start charging you a consulting fee ;) , perhaps start branding the dive shop software a bit harder with it's own website? You are trying to sell website design and SEO services from the same site you are trying to sell your dive and hotel programs. It might be diluting your message a bit. I would think you would want to be seen as the dive shop expert rather than a jack of all trades for things computing.

Now that's what i call constructive critics. :)
Nice idea, the 'how to' articles. It seems I'm writing too many articles and i didn't see the forest within all the trees.
After nearly ten years as a professional scuba diver, my experience in dive shops should well be good enough to write some articles about that topic.

I'm well aware of your last point and I'm working on it. That happened manly because of the physical fusion of two companies, one for web design and marketing and the other is software development. Each product already has at least one own website though and the site ' i think' you referring to, the ProData Software site carries the full picture of all products and services but is not especially promoted.

Thanks again for the input. I'll get right on it. ;)

You are most welcome. I love being able to give back a bit around here. Sometimes I feel I ask many more questions than I can answer/help with.