A common misconception of new pay-per-click (or PPC) advertisers is that high bids instantly zap the budget. Running out of budget early causes ads to go dark. But remember – what you bid is not what you pay.
Think about PPC advertising like any other auction. Whether it is a painting or a Pontiac, you enter into an auction knowing which items you want to bid on and how much you are willing to pay. In PPC, keywords are the items bid on. The highest you are willing to pay is known as the max bid. Just because you are willing to pay that much doesn’t mean you will. When the bidding starts, anyone vying for their ad to show go back and forth until the winner emerges. The high bid is $0.01 higher than the previous bid. This all happens in nanoseconds every time the Google search results page loads.
One other difference between PPC and real-life auctions is quality scores. If the content, ad copy, keywords, and landing page relate to a single topic, a higher quality score applies. That score multiplies your bid. With a high quality score, the winner outbids the competition without ever approaching the max bid.
The only way accurate, real-life data on competition and expense emerges is by running campaigns in a learning mode. Evaluate the costs-per-click experienced, percentage of impressions won, and decide whether the budget suffices. If not, the information is still valuable, because it informs your next step looking for new, lower cost/lower competition keywords to bid on.