Cost-per-click (CPC) bidding allows you to set a maximum price on the cost of someone clicking on your AdWords ads. This bidding method gives you good value because you pay only when a viewer is interested enough to click your ad and learn more.
Think about billboards: Advertisers pay for billboard space based on how many people might see their ad as they drive by, whether those people actually notice the ad or not.
Internet ads are different: Viewers might click your ad when they want to know more. If they click, you know that they saw your ad and, you hope, liked what they saw.
AdWords CPC bidding lets you pay only if someone clicks your ad. If 100 people view your ad and three click it, you pay for the three clicks, not for the other 97 views.
Setting a CPC bid
For CPC bidding campaigns, you set a maximum cost-per-click bid - or simply "max. CPC" - that's the highest amount that you're willing to pay for a click on your ad (unless you're setting bid adjustments, or using Enhanced CPC).
If you think it's worth 25 cents to have someone visit your website, you can set $0.25 as your max. CPC. You'll pay a maximum of $0.25 when a person reads your ad and clicks it, and you pay nothing if they don't click.
Let's say you create a text ad and set a max. CPC bid of $0.25. Five hundred people see the ad, and 23 of them click to learn more. You pay only for those 23 clicks. Your max. CPC bid was $0.25, so you'll pay no more than 23 clicks x $0.25, or $5.75.
Note that often you'll pay less than your max. CPC because with the AdWords auction, the most you'll pay is what's needed to rank higher than the advertiser immediately below you. Read the section below on actual CPC to learn more about the final amount you're charged for a click.
CPC bidding lets you choose your own bid amounts -- that's called manual bidding. Or, you can choose automatic bidding and let AdWords set your max. CPC for you. With automatic bidding, you're telling us, "Set my max. CPC bids to get me as many clicks as you can given my overall budget."
Ways to set your max. CPC bid
You can apply your max. CPC bid several ways. Let's say you have a bakery, and you've set up a "breakfast" ad group with keywords like donuts, crullers, and apple fritters. Here's how you might set your bids:
- Ad group CPCs: Set the same max. CPC for all keywords in one ad group. If you choose a $1 CPC, then that's your max. CPC when someone searches for donuts, crullers, or apple fritters -- any of your keywords. The same bid applies to placements if you're running your ad on the Display Network. This is the easiest way to manage your CPCs.
- Keyword-level CPCs: Set a separate max. CPC for each keyword in an ad group. For instance, if you know that people who search for apple fritters tend to buy more than people searching for donuts, then you might bid $1.25 for each click on apple fritters and $1 for each click on donuts.
- Placement-level CPCs: Advertising on the Display Network? You can set a CPC for each placement if you like. If you know that a certain website gets great results for you, you can bid more for placement there.
How to decide what CPC bid amount to set
How do you know what CPC to set? You can figure this out based on what you know about your business and the value of a sale. For example, if you sell $5,000 diamond rings, one new customer is probably worth more than if you sell $0.99 packs of gum.
Once you've set max. CPC amounts that you're comfortable with, see how many clicks your ads begin to accrue, and whether those clicks lead to business results on your website. Also, remember that Internet traffic is always changing, so it's important to re-evaluate your CPC bids regularly.
Using Google tools to help you decide CPC bids
- Bid Simulator runs "what-if" scenarios like, "How many more impressions would I have gotten if my bid had been $0.10 higher last week?"
- Keyword Planner shows you how often some keywords get searched, and gives you cost estimates at a glance.
- First-page bid estimates helps you see how much you may need to bid to put your ad on the first page of Google search results.
Using bid adjustments to reach the right customerWith enhanced campaigns, you can set bid adjustments that increase or decrease your max. CPC bids for searches occurring on mobile devices or in specific locations. You can also set bid adjustments for targeting methods in your ad group, like topics or placements, if your campaign targets the Display Network. Bid adjustments give you more control over when and where your ad appears, and are applied on top of your existing bids.
The final amount you're charged
Your max. CPC bid is the most you'll be charged for a click, but you'll often be charged less - sometimes much less. That final amount you're charged for a click is called the actual CPC.
Actual CPC is often less than max. CPC because with the AdWords auction, the most you'll pay is what's minimally required to hold your ad position and any ad formats shown with your ad, such as sitelinks.
Now, two other elements affect the actual CPC you pay: Quality Score and Ad Rank. Your Quality Score is a measurement of how relevant and useful your ads and landing page are to a person seeing your ad. It's based on your clickthrough rates and other factors. Once your Quality Score is determined, it's combined with your max. CPC bid, as well as the expected impact of extensions and other ad formats, to rank your ads among other advertisers' ads. This combination is called Ad Rank.
How a max. CPC bid affects your Ad Rank
Your Ad Rank helps determine your ad's position among other ads on search results pages in the Search Network. If you run your ads on the Display Network, Ad Rank plays the same key role there. As Ad Rank is a score that's based on your max. CPC bid and the quality of your ad compared to other advertisers' ads, raising your max. CPC will probably increase your ad's chances of appearing.