How costs are calculated in AdWords
- AdWords gives you control over your advertising costs.
- There's no minimum amount that you have to spend. Instead, you set
an average daily budget and choose how you'll spend your money.
Choosing a bidding strategy based on your goals
Every time someone searches on Google, AdWords runs an auction to
determine the ads that show on the search results page, and their rank
on the page. To place your ads in this auction, you first have to choose
how you'd like to bid. Try choosing a bidding strategy based on your
goals, like whether you want to focus on getting clicks, impressions, or
conversions.
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Focus on clicks on your ads.
This is known as a cost-per-click, or CPC bid. We recommend the CPC bidding method if you want to drive traffic to your website. |
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Focus on impressions, or the number of times your ad shows.
This is known as a cost-per-impressions,
or CPM bid. We recommend the CPM bidding method if you want to increase
awareness of your brand. Note that CPM bidding is available for Display Network campaigns only. |
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Focus on conversions, or when people take a specific action on your website after clicking on one of your ads.
This is known as a cost-per-acquisition, or CPA bid. We
recommend the CPA bidding method for seasoned AdWords advertisers who
are interested in conversions, like purchases or signups.
These are the different bidding strategies that you can set.
Read the section below to learn more about choosing a bidding strategy.
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AdWords essential
The auction: how Google decides which ads to show and their order
Choose a bidding strategy
Most people starting out in AdWords use the basic
CPC bidding strategy, which means they accrue costs based on the number of clicks they get on their ads.
If you use the CPC bidding strategy, the amount you're charged per click depends in part on the
maximum cost-per-click bid
you set in your account, also called "max CPC" bid. This represents 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).
In fact, the most you’ll pay is what’s minimally required to hold your
ad position and any ad formats shown with your ad (including any
applicable service fees that may apply to Display Network campaigns). So
you'll often pay less than your maximum bid. The actual amount you pay
is called your
actual CPC.
Example
Let's say you've set a maximum CPC bid of US$1 for your ads. The most you'll pay when a customer clicks your ad is $1.
Control your costs
Now that you understand the basics of how costs work in AdWords, let's look at the ways you can control your costs:
Budgeting for Your Online Advertising
Learn
how to set and manage your advertising budget so you get the
sales—without any surprises. Determine the right budget for you and
figure how much to pay per click so you can control your costs while
growing your sales.
Read more about managing your AdWords budget at http://goo.gl/Ew4Eh.
Subscribe Subscribe to AdWords Help on YouTube
http://www.youtube.com/learnwithgoogle.
Note: Video instructions are up-to-date, but don't show the latest AdWords design.
Your
daily budget
is the amount you're willing to spend each day, on average, for each ad
campaign in your account. The size of your budget is entirely up to you
and you can edit this amount whenever you like.
Recall that when you set your max CPC bid, the amount you're
charged for a click on your ad in a given auction could be less than
your max. This means the amount you pay for a click on your ad - your
actual CPC
- will likely vary from auction to auction. Even though your actual
CPCs may vary, your daily budget puts a limit on how much you can accrue
in click costs from day to day.
Google may allow up to 20% more clicks in a day than your daily budget specifies. We call this
overdelivery.
Overdelivery can help make up for days when traffic is slow and your
ads don't get as much exposure. However, in a given billing period,
you're never charged more than the average number of days in a month
(30.4) times your daily budget.
Example
If the budget for your ad campaign remains at $10 per day
throughout an entire month, the maximum amount you would be charged for
that campaign for that month is $304 ($10 x 30.4 average days per
month). Recall that because of overdelivery, your daily cost might be
more or less than your $10 daily budget on days when traffic is higher
or slow.
If you use the cost-per-click bidding strategy, you set a maximum
CPC bid for your ads. You can always lower your bid amount, but if you
do, it might cause your ads to show up in a lower position on the first
page of search results, to move from the top to the side or bottom
position, or to be removed from the first page search results. In
general, a higher maximum CPC bid can allow your ad to show at a higher
position on the page.
Tip
Put your bidding on autopilot with
automatic bidding. Set a daily budget, and AdWords will help adjust your CPC bids to receive the most possible clicks within your budget.
Google uses a measurement called Quality Score as an estimate of
how relevant your ads, keywords, and landing page are to a person seeing
your ad. Higher Quality Scores typically lead to lower costs and better
ad positions.
How can you improve your Quality Score? Make sure that you choose
high-quality keywords and create relevant ads. Here are a few tips to
help you get started:
- Choose keywords that are terms or phrases your customers would
use to describe your products or services. High-quality, relevant
keywords can help you reach the customer you want, when you want.
- Create ads that are relevant to your keywords and what you're
advertising. Relevant ads tend to earn more clicks, appear in a higher
position, and bring you the most success.
Example
Let's say your maximum CPC bid is $2. Meanwhile, your competitor
has a maximum CPC bid of $3 but the quality of his ads are below
average. Because of the higher quality of your ads, your ad could
actually show in a higher spot on the page, even though your bid is
lower.
AdWords essential
Relevance: how ad quality affects your costs and performance
Tip
Try using
Keyword Planner,
a free AdWords tool, to help guide your decision on which bids and
budgets to set. Keyword Planner shows you traffic estimates, like
estimated clicks, to help you get an idea of how a keyword list might
perform for a given bid and budget. Note that Keyword Planner gives you
estimates for the Search Network only.
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