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Suggested bid is the price that Google recommends you to bid in the auction for a click. An auction occurs every time a person types that keyword into Google. If you bid this price, you’ll pay this amount per click if a user clicks on your ad.
You can bid less than the recommended bid, but then Google will only show your ad if Google thinks your ad and landing page is more relevant than the competitive bids for that user, or if other competitors are not bidding as high for some reason.
For example, if you bid lower you may find you are showing up more for mobile phone searches rather than desktop, because mobile doesn’t tend to convert as well and so manual bidders will often bid lower for mobile.
You need to take heed of the suggested bid, because it will dictate how much traffic you are likely to get for a given budget. No point in having a $10 daily budget if clicks for the keyword you want cost $11 per click.
Reviewing suggested bid in the Keyword Planner list allows you to find keyword opportunities that are in alignment with your budget. For a larger business with larger budgets, the keywords with higher bids also imply that they are likely to convert better.
To create the suggested bid price, Google has its own internal algorithm for how much a click should cost and also the data from historical paid bids. They compare the historical demand for a keyword versus how much advertisers are willing to pay for it.
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