Actual cost-per-click (CPC): Definition
Your actual cost-per-click (actual CPC) is the final amount that you're charged for a click. You're often charged less – sometimes much less – than your maximum cost-per-click (max. CPC) bid, which is the most that you'll typically be charged for a click.
Actual CPC is often less than max. CPC because with the AdWords auction, the most that you'll pay is the minimum required to hold your ad position and any ad formats shown with your ad, such as sitelinks. Bear in mind that your actual CPC may exceed your max. CPC if, for example, you’ve enabled Enhanced CPC or if you've set a bid adjustment.
How this works
We combine the auction-time ad quality (including expected click-through rate, ad relevance and landing page experience), the max. CPC bid, the Ad Rank thresholds, the context of the person's search and the expected impact of extensions and other ad formats to determine Ad Rank. When estimating the expected impact of extensions and ad formats, we consider such factors as the relevance, expected click-through rates and the prominence of the extensions or formats on the search results page. Each advertiser’s Ad Rank is then used to determine where the ad appears and what types of extensions and other ad formats will show with the ad (or whether the ad or ad format will appear at all).
For ads on the Search Network, the Ad Rank thresholds (and the resulting actual CPCs) are typically higher for ads above search results in order to maintain a high-quality experience and to help ensure that actual CPCs reflect the value of the ads’ prominent location. As a result, the actual CPC when you appear above search results is often higher than the actual CPC if you appear below search results, even if no other advertisers are immediately below you. Although you may pay more per click, top ads usually have higher click-through rates and may allow you to show certain ad extensions and other features available only in the top ad slot. As always, you’re never charged more than your max. CPC bid (unless you're using automated bidding tools).
- Assume five advertisers are competing for a maximum of four ad positions above search results on the Google search results page. The respective Ad Rank of each of the advertisers is, say, 80, 50, 30, 10 and 5.
- If the minimum Ad Rank necessary to show above the search results is, say, 40, only the first two advertisers (with Ad Ranks of 80 and 50) exceed the minimum and show above the search results. The advertiser with the Ad Rank of 80 pays just enough (rounded up to the nearest billable unit, which in the US is $0.01) to beat the advertiser with the Ad Rank of 50. Since there’s no other eligible competition, the advertiser with the Ad Rank of 50 pays just enough to beat the minimum Ad Rank of 40.
- If the minimum Ad Rank necessary to show below the search results is 8, then two of the three remaining advertisers (with Ad Ranks of 30 and 10) will show beneath the search results. The advertiser with an Ad Rank of 30 will appear in the first position beneath the search results and will pay just enough to beat the advertiser with an Ad Rank of 10. The advertiser with an Ad Rank of 10 will show beneath that advertiser and will pay just enough to beat the minimum Ad Rank of 8. The advertiser with an Ad Rank of 5 didn’t meet the minimum Ad Rank and so won’t show at all.
For certain ads on the Display Network, your actual CPC will be different. Learn more about the Display Network ad auction.