A low quality score is typically the result of a low CTR (click through rate). Low CTR’s are the result of one or more of the following variables:

1. your ad copy is not relevant to the keyword you are buying
2. your ad copy is not relevant to what the searcher is looking for
3. your ad is not being displayed in premium places (due to low bid or low quality score)
4. Your quality score may be affected by a poor landing page – one that does not have content (text) that is relevant to your ad and keyword. The best text ad campaigns have their own landing pages, rather than just direct people to a common web page on your site.

With regards to bidding on competitor’s keywords, it’s a grey area. If you are selling tires and you bid on the brand name of a tire, you should have that tire’s info on your landing page. If not, people will bounce from your landing page.

There are also a number of legal issues with bidding on competitor names. I am not an attorney, so I will not provide legal advice in this forum, but I do know that many cases on this issue are pending. So long as your ad does not confuse the searcher into thinking you are that company and it is clear that you are a competitor, you are “probably” okay. But, I would recommend as a matter of policy that you do not bid on competitor names at all.  Typically these convert to leads poorly, because searchers were not looking for your site, they were looking for the competitor’s site. Plus, if you bid on competitor’s names, what’s to stop them from doing the same, and that drives up the cost of your branded keywords (which should be your bread and butter). You’ll start a keyword bidding “arm’s race”.

Your question about budget and CPC is completely variable depending upon your business model, objectives and industry. Certain keywords can cost $25 per click in various industries, while others can cost just pennies.

Some companies literally spend millions of dollars per week on search, and can afford unlimited budgets, while other can only spend a few hundred. This is entirely driven by your business model, so I cannot provide any advice there.

It is not a violation of Google’s Advertising policy to bid on competitor’s names in the USA. However, you still may not want to do this. The person who said “Google frowns on this” is incorrect. But like I said, there are court cases pending, as this is a very active area of Internet law.