Do you know how the AdWords auction works?

Tim Harford, the “Undercover Economist” – who will be familiar to Financial Times readers and Radio Four listeners – wrote a nice piece last week about the way in which Google auctions its advertising. I thought it was worth pointing out, because I know many people get a bit confused about how Google Adwords pricing works. The article explains the automated auction system well, and should help you understand why some clicks cost you ten pence and others five pounds. The trick, of course, is to work out the return on investment on every search term you’re bidding to appear alongside. Alternatively, of course, you can use us to run the whole show for you, where you’ll pay a fixed amount per visitor and we absorb all of those huge variations. We’re happy to look at running accounts for companies wishing to spend as little as £750 a month on AdWords.

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