Cost-per-click (CPC) Bidding
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 click your ad when they want to know more. When they click, you know that they saw your ad and (you hope) liked what they saw.
AdWords CPC bidding lets you pay by the click, and only if someone clicks. If 100 people view your ad and 3 click it, you pay for the 3 clicks, not for the other 97 views.
Setting a CPC bid
To set a CPC bid, you enter the highest price you want to pay for a click. That is called your maximum CPC bid, or simply “max CPC.”
Example
If you think it’s worth 25 cents to have someone visit your website, you can set US$0.25 as your max CPC. You’ll pay a maximum of US$0.25 when a person reads your ad and clicks it, and you pay nothing if they don’t click.
CPC bidding lets you choose your own bid amounts — that’s called manual bidding — or 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 for my overall budget.”
Example
You create a text ad and set a max CPC bid of US$0.20. 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 US$0.20, so you’ll pay no more than 23 clicks x US$0.20, or US$4.60 — and often you’ll pay less than that amount.
How a max CPC bid affects your ad rank
The max CPC you set 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, your max CPC plays the same key role there. In both cases, raising your max CPC will probably increase your ad’s chances of appearing.
Your actual CPC
Your maximum 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, you will pay no more than what’s needed to rank higher than the advertiser immediately below you.
Now, two other elements affect the actual CPC you pay: Quality Score and Ad Rank. Your Quality Score is a measure of how useful your ad is to the people who see it. It’s based on your clickthrough rates and other factors. Once your Quality Score is determined, it’s combined with your Max CPC bid to rank your ads among other advertisers’ ads. That combination is called Ad Rank.
Ways to set your max CPC bid
You can set 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 US$1 CPC, then that’s your max CPC when someone searches for donuts, crullers, 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.
Using bid adjustments
With enhanced campaigns, you can set bid adjustments that increase or decrease your bids for searches occurring on mobile devices, in specific locations, and at particular days and times. 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.
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 US$5,000 diamond rings, one new customer is probably worth more than if you sell US$0.99 packs of gum. Or you can use the tools Google has created to help you learn more:
- Bid Simulator runs “what-if” scenarios like, “How many more impressions would I get if I raised my bid by $0.10?”
- 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.
Enhanced cost-per-click (ECPC)
Enhanced cost-per-click (ECPC) is a bidding feature that raises your bid for clicks that seem more likely to lead to a sale or conversion on your website. That helps you get more value from your ad budget.
Imagine that your job is to stand outside a barber shop and bring in new customers. If a businessman with shaggy hair comes walking by, you give him a big wave and a hello. If a bald man walks by, not so much.
ECPC does a similar job for your AdWords ads. It’s a bidding feature that looks for ad auctions that are more likely to lead to sales for you, and then raises your max CPC bid up to 30 percent to compete harder for those clicks. When it sees auctions that don’t look promising, it lowers your bid. That way you can get more sales and conversions out of the ad dollars you spend.
ECPC works on Google, the Search Network, and the Display Network, but isn’t available for the “Display Network only – Mobile Apps” campaign type.
Example
Suppose you sell shoes on your site, and you’ve set your max CPC for US$1, and you have ECPC bidding turned on. If the AdWords system sees an auction that looks likely to lead someone to buy shoes on your site, it might set your bid as high as US$1.30 for that auction (that is, your US$1 max CPC bid plus 30 percent more).
http://youtu.be/wnJi3x8rTVc
How does ECPC know which auctions are promising?
The AdWords system looks for patterns of clicks and conversions and compares them to your past results. If certain search or keyword combinations lead to more sales, for instance, it will know. That’s why, to use ECPC you have to have conversion tracking turned on, because that’s where the data comes from.
ECPC will increase your max CPC bid by up to 30 percent when it sees a good opportunity. It’ll also lower your max CPC by any amount (even more than 30 percent) if it determines a conversion isn’t likely, so you’ll pay less for clicks that convert less.
Tip
Because ECPC will increase your max CPC bid by up to 30 percent when it sees a good opportunity, don’t be surprised if your AdWords report shows average CPCs that are over your max CPC.
How will I know ECPC is helping me?
ECPC double-checks itself by leaving part of your traffic alone to work with your regular max CPC bids. Then it compares the two sets of results and adjusts accordingly. So when you choose ECPC, you should see conversion results that are better than, or at least the same as, the results you get without it.
How is ECPC different from Conversion Optimizer?
Both ECPC and Conversion Optimizer work to get you more conversions. The key difference: ECPC works with the max CPC bid you set, never going more than 30 percent over it. Conversion Optimizer needs no max CPC, though it does require a CPA bid.
Conversion Optimizer gives you the very best chance to improve your results, but ECPC provides a level of control and comfort that some people prefer.
Both ECPC and Conversion Optimizer
- Use conversion tracking or Google Analytics data from your account
- Predict a conversion rate for each auction
- Adjust your bids to help you win the most promising clicks
- Works with all your campaign settings and max CPC bids
- Can raise bids by up to 30 percent
- Works with third-party bidding systems
Conversion Optimizer
- Lets you set either a target CPA or max CPA
- Has full freedom to set your CPC bid for each auction
- May not work with some API-based bid management solutions
Tip
If your campaign doesn’t have conversion tracking turned on, opting into ECPC will have no impact on your bids.
How to turn on ECPC:
- Sign in to your AdWords account.
- From your Campaigns tab, click the name of the campaign you want to work with.
- Click the Settings tab.
- Find the Bidding and budget section. Next to “Bidding Options,” click Edit.
- Find Enhanced CPC, and check the box reading “Use my conversion tracking data and bids to optimize for conversions.”
When you choose ECPC, AdWords will automatically set your ad rotation settings to “optimize for conversions,” even if it’s currently set to “optimize for clicks.”Remember that you also must have conversion tracking enabled for ECPC to work.
Cost-per-thousand-impressions (CPM) Bidding
Many advertisers hope viewers will click their ad — but that’s not always the main goal. Maybe you just want a lot of people to see your ad. In that case, bidding by cost-per-thousand-impressions (CPM ) is a good way to go. With CPM bidding, you bid for your ad based on how often it appears on the Google Display Network. You set the max amount you want to pay for ads, whether they’re clicked or not.
Why use CPM bidding
Some people prefer CPM bidding because they want to be able to set a maximum amount they’ll pay for each impression, instead of for each click.
Others simply don’t care about clicks for their ad campaign. Businesses that just want to get their name in front of more people, for instance, may care more about ad views than about clicks and visits to their website.
CPM bidding is currently available for the “Google Display Network – All features” and “Google Display Network – Remarketing” campaign types only.
Tip
If your main goal is online sales or visits to your website, then cost-per-click (CPC) bidding may be a better option for you.
A quick comparison of CPM and CPC bidding
We’ll get into a few more details below, but here are some of the basics:
| CPM bidding | CPC bidding | |
| Consider | You care more about your ads being | You care more about clicks |
| using this | viewed than about clicks | |
| if: | ||
| Bid: | Maximum amount you’re willing to | Maximum amount you’re willing to |
| spend for 1000 impressions. | spend for 1 click. | |
| Actual | No more than what’s needed to | No more than what’s needed to |
| amount | rank higher than the advertiser | rank higher than the advertiser |
| charged: | immediately below you. | immediately below you. |
How CPM and CPC bids compete
Ads with different bid types can compete for the same Display Network placements.
To keep things fair, when CPC and CPM ads compete for the same Display Network placement, the two types of ads are compared apples-to-apples on how much they’re effectively willing to pay for the impression. With a CPM ad, the max CPM bid represents how much the advertiser is willing to pay for each 1000 impressions; with a CPC ad, Google estimates how many clicks the ad might receive in 1000 impressions to get the comparison.
Learn more about how CPM and CPC bids compete/
How to use CPM bidding
With CPM bidding, you set the highest amount you want to pay for each 1,000 ad impressions. This is called the maximum CPM bid, or just “max CPM.”
The higher your max CPM, the greater the chance that your ad will appear. As always, the AdWords system will charge you only what is needed to place your ad above the next-highest ad.
Tip
CPM text ads can have a special edge: when they win a placement, they’re sometimes given the entire ad space, rather than sharing the space with other text ads. That makes them more likely to be noticed.
For typical campaigns, a reasonable starting point for a CPM bid is somewhat higher than the CPC bid you’d use for CPC text ads with the same targeting.
You can set your max CPM bid in a couple of ways. Let’s say you sell flowers, and you’ve set up an ad group with keywords like roses, daisies, and tulips.
Ad group CPMs: Set your max CPM at the ad group level, and you’ll have the same CPM for all keywords and placements in that ad group. Let’s say you choose an ad group CPM of US$1.20. If your ad shows on a site that’s associated with roses or tulips, or appears on a blog about flowers, the max CPM is always US$1.20. This is the easiest way to manage your CPM bids.
Placement-level CPMs: You can set a CPM bid for each placement if you like. If you know a site gets great results for you, you can bid more for placement there.