Ah, the question about max bid is always asked by beginners starting PPC. In most cases, setting a value and forgetting doesn’t work because you are not maximizing your CPC. It is also important to have good tracking on your campaigns so that you know where to tweak and optimize your bids.

So let’s get started.
Is it better to bid a maximum of $0.10 at the start, or is it better to bid higher (e.g. $0.30) and then gradually lower it over time?

Starting Low
If the keywords you are bidding on are very competitive, then starting at $0.10 will get you nowhere. Now what if you slowly bump up by $0.05 increments until you get impressions? I have heard of people trying this technique and still never getting impressions. You may have ruined your campaign forever.

Starting High
The alternative is to start high (e.g. $0.30) to lock in your traffic, and then gradually lower your bids to a sustainable level. Yes, it is very difficult to make money bidding over $0.20 on a typical e-mail or ZIP submit campaign, but if you know that you are getting good conversion rates, then you can rest assured that lowering your CPC will eventually keep you afloat. In this stage, you will lose some money to research what adgroups are getting traffic and are converting. If you are not getting decent traffic from certain adgroups, you can prune them to improve your CTR with Google. This is a small sacrifice to learn what works and what doesn’t.

The general rule of thumb for me is to bid $0.25 right off the bat. If impressions and conversions are decent, gradually reduce by $0.02 per day. At around $0.15-$0.19, you should slowly lower it by $0.01 per day until you hit your maximum ROI. Don’t expect all adgroups to give you the same ROI. Certain adgroups can only go as low as $0.14 and earn you 25% ROI. While other adgroups can go lower to $0.10 and give you 100% ROI.

The general theme on bidding is to divide and conquer until you have found a happy medium.

Caveat
Aha, there’s always the damn fucking caveat at the footer of all documents.

1. If you have a good history with Google, you can actually start your bids off right where you want it to. Initially, you may have to start at $0.25, but with good standing with Google, you can start at a lower bid price.
2. Even bidding $0.50, if you have a new Adwords account, it may take 5-7 business days to get impressions. So please be patient and don’t setup 30 campaigns in frustration. When it kicks in, you’re going to lost a lot of money quick.