Google AdWords

Chapter 11. Bids, Budgets, and Billing, Oh My

How Bidding Works

Cost-per-click bidding (CPC) is also referred to as pay-per-click (PPC). It’s a pricing model where an advertiser pays only for clicks on ads. An ad can display one million times, but if no one clicks, it does not cost the advertiser. Naturally it’s in Google’s best interests to show ads that receive clicks; keywords with higher clickthrough rate (CTR) are rewarded with better Quality Scores.

There are several bidding models available. This chapter explains how each model works, how AdWords calculates actual costs, and what billing options are available to advertisers.

Manual Maximum CPC bidding

The default bidding option is manual maximum CPC bidding, shown in Figure 11-1. This model specifies the maximum amount you are willing to pay for an ad click. Bids are set at the ad group level and the keyword level.

Figure 11-1. Manual bidding offers control over Max CPC bids

Automatic Bidding

Automatic bidding allows AdWords to manage your bids. This model tries to generate the most clicks possible within the budget. By default, the system automatically chooses whatever bids it determines will earn the most clicks.

The automatic bidding model finds clicks, nothing more. It does not help achieve higher conversions, profitable ad positions, or lower click costs. If you use this model, I recommend specifying a bid limit. To ...