Search Advertising assessment study guide
About Manual CPC bidding
With Manual Cost-Per-Click (CPC) bidding, you can set a maximum price on the cost of someone clicking your ads. You can get good value with this bidding method because you pay only when a viewer is interested enough to click your ad and find out 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: With Google Ads CPC bidding, you only pay for Google's "billboard space" when you know that users have seen your ad and been motivated enough to click. If 100 people see your ad and three click it, you pay for the 3 clicks, not for the other 97 views.
How CPC bidding works
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 £0.25 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 that you create a text ad and set a Max. CPC bid of £0.25. If 500 people see the ad, and 23 of them click to find out 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.
Often you'll pay less than your Max. CPC because, with the Google Ads auction, the most that you'll pay is what's minimally required to hold your ad position and any ad formats that are shown with your ad, such as sitelinks. Read the section below on actual CPC to find out more about the final amount that you're charged for a click.
The power of Google Ads automated bidding
Google Ads automated bidding takes much of the heavy lifting and guesswork out of setting bids to meet your performance goals. Conversion-based bidding is powered by auction-time technology, optimising bids with precision on actual search queries for each and every auction. It also factors in a wide range of auction-time signals including device, location, time of day, language and operating system to capture the unique context of every search. Find out more about Google Ads automated bidding.
How to decide what CPC bid amount to set
How do you know what CPC to set? You can work 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 chewing 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 such as, "How many more impressions would I have had if my bid had been £0.10 higher last week?"
- Keyword Planner shows you how often some keywords are searched, and gives you cost estimates at a glance.
- First-page bid estimates helps you to 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 customersYou can set bid adjustments that increase or decrease your Max. CPC bids for searches occurring on mobile devices or in specific locations. If your campaign targets the Display Network, you can also set bid adjustments for targeting methods in your ad group, such as topics or placements, to help your ad show to the most relevant audience. 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 that you're charged
Your Max. CPC bid is the most that 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 Google Ads auction, the most you'll pay is what's minimally required to hold your ad position and any extensions shown with your ad, such as sitelinks. For example, if your Ad Rank places you immediately above search results (e.g. in the fourth position) with location extensions and sitelinks, you’ll pay the minimum amount necessary to keep that position – and meet the relevant thresholds tied to that position – with those extensions. You can learn more about Ad Rank and actual CPC by watching the video below.
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.
Max. CPC bidding options
You can apply your Max. CPC bid in several ways. Let's say that you have a bakery, and you've set up a "breakfast" ad group with keywords like bagels, croissants and teacakes. Here's how you might set your bids:
- If you want all the keywords in an ad group to have the same bid: Set an ad group default bid. If you choose a £1 CPC, then that's your Max. CPC when someone searches for bagels, croissants or teacakes – 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.
- If you want the keywords in an ad group to have different bids: Set keyword bids. For instance, if you know that people who search for teacakes tend to buy more than people searching for bagels, you might bid £1.25 for each click on teacakes and £1 for each click on bagels.
- If you want your Display Network targeting methods to have different bids: You can set a Max. CPC for placements, topics or other targeting methods. For instance, you can try to help your ad show on a doughnut recipes website by setting a custom bid for that particular placement on the Display Network.