Since the latest Quality Score update, one of the new features was doing away with the “inactive” classification for keywords whose maximum cpc was below that of Google’s set minimum bid. Instead we have the “first page bid” qualifier which will label keywords with a maximum cpc too low to appear on the first page of search results.
It’s been said already that by creating this label Google is admitting that having your ads on any page but the first page is an exercise in futility and what we all already know, that you’ve got to get on that first page, be it paid or organic, to get the results you want. More and more people aren’t clicking through to the 2nd, 3rd or even 4th search results pages and instead change their search query if they don’t see what they’re looking for on the first page.
What does this really mean for Google though? It means more revenue, pure and simple. By placing that warning of an “bid is below first page estimate” it sends a small panic message to the advertiser.
Technically your ads are still showing (unlike with the previous inactive classification) but this encourages you to increase your bid for first page placement. And sooner than you would have with the inactive classification. If you see an inactive keyword, you either leave it or increase the bid, but it certainly takes longer for a keyword to hit the inactive amount than it does to hit the below first page placement amount. So essentially what Google is doing is creating the need to increase your bids sooner and more often.
And since Google’s AdWords system is an auction system, who wins when the price goes up?
“…ad prices are not set by Yahoo! or Google, but by advertisers themselves, through the auction process. Since advertisers set prices themselves via an auction, the prices must ultimately reflect advertiser values.”
It’s not the advertisers who win, that’s for sure.
Obviously I prefer the inactive classification over the new first page placement, mostly because the average position column already shows you whether or not you were on the first page or not. I’d rather know what the lowest amount is that I can bid while still showing, which is clearly not what Google would rather have me do.