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How do I determine what to bid?; How does PPC advertising work?

Determining your Maximum bid

Pay Per Click programs do vary but generally your maximum bid should equal your conversion rate multiplied by the profit per sale. For example, 100 people visit your site and 3 people purchase an item with a $10 profit margin each. Your total profit margin is $30. Your conversion rate is 3%. Following the given formula, in order to make pay per click advertising profitable, your maximum bid should not exceed 30 cents (.03 x $10 = 30 cents).

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