Adwords Suggested Bid Lower Compared to First Page Bid

When i search for this keyword in keyword planner, i get 0.01 as suggested bid.

Then when i start a campaign, to bid on this keyword with exact phrase match, its 2.00

What am i missing here, will my ad still show up if i'm bidding a maximum 0.05 ?

Cheers

Keyword planner is just approximate. It's better if you have data and use "estimate first page" column in the AdWords dashboard.

The keyword planner bases its estimates on historical data for the long tail keyword.

In the real world, you are competing against those bidding simply on "espresso machine", not just your longer tail. Since bids are higher, you also need to bid higher to get a first page position.

Yes, you can bid five cents. But given that it appears there may be many bidding much higher, your ads are not going to show often as you'll be ranked on the second page and beyond, even if your QS was 10.

You can test how often your ads show by checking the Impression Share (IS) percentage. My guess is that if you bid five cents for a keyword whose going rate is $2, your IS will show <10%.