Well, I get that periodically and yet it still will show clickthroughs, sometimes even at a higher rate than other terms that are on the first page. So I think either people click more on the second page ads, Google is still showing the ads on content sites regardless, and/or I suffer a lot of click fraud.

I'm also curious as to the first page estimate it throws at me.

I've encountered the following:
Say there was a product/service that no one advertised, but the first page bid estimate was astronomically high, would I still get my ad displayed on the first page despite having a bid lower than that of the first page bid estimate?

It may be a silly question, answer as you like.

If thee were no one who bid high enough to get on the first page but still made bids, I would suspect they would stick to their guns and not show ads until the second page. Otherwise, people would figure out they could get ads shown for much lower bids.

We are being asked to bid amongst ourselves to increase google's income. Rebel, do not increase your bids, aim for first on page 2 if needs be, show that we stand to be counted. This war will be long, but until we start we cannot win! Victory is ours if we attack, reduce your bids brave warriers!

You know it makes sense! :-)

Why is the word estimate throwing you? Things change and sometimes very fast in Adwords. Therefore, given the current conditions (your competitors, how much they are bidding, their QS and most important your QS), the system estimates that you need to bid that amount to be on the first page.

Is it true and accurate? Well, you only have their word for it so that would be a personal opinion. Seems accurate enough but sometimes wonder. For example, the FPBE says $0.50, and you bid that amount or lower but your position is 3.

The estimate is accurate as far as the data it uses to calculate it. There are many other variables it likely doesn't take into account such as regional variations.

If as HRoth suggests that all advertisers reduced their bids, that changes the parameters. Each advertiser would get a new, lower, FPBE. Note that the estimate is based on your QS. Everyone has a different one. There is no such thing as not showing ads on the first page and start on the second.

Zee, never assume there is no other advertiser. In fact, you can bet on it. Doesn't mean that you don't see them in your location doesn't mean they don't exist or have never existed. I believe the system takes that into account as well, it uses historical data to calculate your FPBE which again, is based on your own QS. Would it show your ad (assuming you are the only one or one of a few)? Likely yes although probably not 100% of the time.

My suggestion is, if you're happy with your current position and cost, stick with it. But you should do some testing to find out how different bidding points affect the campaign.

First page bid is an estimate for first page across all your geographies when that exact keyword is searched.

It's common to see an ad below first page but show on first page for some of your advertising reach or for variations (for broad, expanded broad, and phrase matches).

Your best bet is to figure out what is profitable for you to bid; and bid that number. Then work on increasing conversion rates so that you can raise your bid while still maintaining profits.

I see that warning all the time for keywords that are averaging between #1 and #5 placement (on the first page).

I'd heed eWhisper's advice and bid based on what a profitable CPA is for you.

Google's advice is helpful when you're trying to troubleshoot, but other times it can simply be ignored.