The AdWords blog has strated a new series of post about common misconception. The first part of the post, will briefly cover the most important facts. Here it goes:
The common misconception: Many advertisers believe that if they have no competitors for a keyword, their minimum cost-per-click (CPC) will automatically be lowered by the AdWords system to $0.01, the lowest possible CPC.
How it actually works: The minimum CPC for a keyword is not related to the number of competitors one has that keyword. Instead, minimum CPC is dependent on the Quality Score of the keyword, as it's used in the advertiser's account. This functionality was introduced in August 2005, when keyword bidding evolved to a quality-based model.
Are there really no competitors?
If you look for your ad and see no competitors, this does not necessarily mean that there are no others advertising on that keyword. For example, many advertisers choose to show their ads only during particular times of the day, so you will not necessarily see them when your ad appears. Or, while you might be targeting the entire United States, competing advertisers may be regionally targeting and not including the area in which you are located -- in which case you'll not see their ads.
Why doesn't Google show ads for every keyword?
We are often asked if we wouldn't prefer to make additional revenue, rather than allowing keywords for which no ads appear. In point of fact, Google would prefer to show no ads for a user's search query, rather than to show ads which provide a poor quality experience for users who click on them -- and which might damage long-term user trust in the the quality of information delivered by AdWords ads.
Google, AdWords, Tips and Tricks, Knowledgebase, Article, Ads Quality