High-Paying Keywords, Part 3 (series)

In Part 1, we talked about the kinds of high-paying keyword lists. In Part 2, we discussed how high-paying keyword lists are created. Today, we talk about why you need to take the keywords values with a grain of salt.

The Problems with High-Paying Keyword Lists

When you scroll through a list of high-paying keyword lists, there are a couple of things to keep in mind:

• When was the list last updated? Keyword values can vary greatly over time.
• Where do they get the data? Keyword values also vary depending on the advertising service.

Let's assume that the list we're talking about collects its information from AdWords, although the same comments can be said about Yahoo's Overture program (the view bids tool makes it easy to see what a particular keyword is worth on Overture without having to login to anything, though you can also get the same functionality using AdWords' keyword tool).

AdWords uses a bidding model. To get the top spot for a keyword, you have to bid more than your competitors, though there's a feedback element in there that doesn't guarantee you'll actually get first place unless your ad gets clicked on and the landing page it goes do is related to the keywords you're bidding on. In general, though, you have to bid higher to get higher placement.

But just because someone bids (say) $50 for a keyword doesn't mean that AdSense publishers will get anywhere near $50 per click for that keyword, because of several reasons:

• Google takes a cut. Remember that you're sharing revenue with Google. Those keyword values are based on what the advertisers are paying Google, not you.
• Different prices for the content network. This is a good question to ask the list provider: are those prices they're quoting coming from Google's search network or from the content network? Advertisers can bid separately for the same keywords when they're shown on Google's own sites vs. third-party sites like AdSense publishers. And they generally pay more for ads on Google's sites.
• No one pays the maximum bid. The top advertiser actually pays a value just above what the second place bidder bid. The gap between the first and second bid prices may be significant, as the top bidder may be overpaying just to get the top spot, but not expecting to actually pay that much in most cases.
• Bid prices fluctuate greatly during the day. Smart advertisers jump in and out throughout the day. Some advertisers, for example, only activate their campaigns during the working day for their primary audience, and pause them otherwise.
• Advertisers have budgets. In AdWords, an advertiser sets a daily budget to limit how much they pay per day. Once their budget has been reached, their ads are pulled out of circulation until the next day starts.
• Smart pricing. Google has a “smart pricing” feature that reduces ad costs for advertisers based on where the clicks are coming from. If they're coming from sites that don't generate many sales for the advertiser, the price they pay is reduced, sometimes significantly. This is what AdSense publishers refer to as being “smart priced”, which means that the sites in their entire account (it's apparently per-account, not per-site right now) have been flagged.

This is not to say that the higher-priced keywords aren't valuable, only that they're not as valuable as you may be led to believe. And don't forget that the competition for the top keywords is fierce, since everyone and their dog are selling keyword lists to eager AdSense publishers looking to make a quick buck. More on this later in the series.

Speaking of competition, let's turn our attention tomorrow to judging keyword popularity/competition.

Eric Giguere is the AdSense expert who wrote Make Easy Money with Google and the new e-book Uncommon AdSense.

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