Since I didn’t get any notification that there was a new feature, I had no idea what it meant or what it would do. So, being curious, I clicked on it.What resulted was a light box with several different bid levels and associated impressions listed.

That was last week. This week, it now includes estimated clicks and impressions at different maximum bids for keywords that have (I would guess) accumulated enough data to support a projection.

Although interesting as a concept, I am a bit skeptical about the application. For instance, the keywords that I looked at were primarily brand phrases, where my bid levels (one would think) do not need to be very high, given that I have a 10/10 relevancy score, average position of 1 and plenty of budget for the ads to be shown all day long.

The bid simulator, however, suggested some outrageously high bid levels! Here is a screen cap of one of my brand phrases – notice the top bid it recommends is extremely high. Why would I want to risk paying up to $36 per click on a brand term to get an additional 31 impressions?

(Click on the thumbnails to see more details.)

Short story – it’s really easy to increase your bids with the bid simulator – but may not be the best approach for your campaign.  Suggestion – look at the point of diminishing returns – where will the increase in traffic be outweighed by the increase in clicks? In the third thumbnail example, I dropped the bids down to $1.57, since that seems like the optimal combination of cost and clicks.

Here are some additional references to read about this new feature.

Google Adwords help for Bid Simulator.

Search Engine Watch article about Adwords Bid Simulator

Search Engine Land article - interesting screen caps of a previous version of the bid simulator!

There seem to be a fairly robust number of posts about the bid simulator, but most of them refer to the older version, shown on the Search Engine Land article.

UPDATE August 5, 2009 – Yesterday the Bid Estimator was there. Today it is not. Very odd that the only difference between yesterday and today is that I wrote this post – don’t know if there is a direct correlation, but it seems very odd….