Google's unique auction pricing model shows your ad only when your bid wins the auction for an available spot. Then it adjusts the price so you never pay more than the minimum needed and you keep the savings.
If you're running simultaneous campaigns on both the Search and Display Networks, you may want to set separate bids for each. You can do this with the bidding feature and manage your budget.
There are also many money-saving technologies built in to AdWords, to help you manage your costs.
Cost per click (CPC)
Pay only when someone clicks your ad.
If your goal is to get more traffic to your website, this is perfect for you. The amount of your bid is a key factor in determining whether your ad is showing in the places that you want it to, and increasing this bid can improve the chances of your ad appearing.
If you choose automatic CPC bidding, you simply set a daily budget of how much you want to spend in one day, and let Google technology bring you the most clicks possible. Or you can specify bids for each ad group, keyword or placement with manual bidding.
Cost-per-thousand impressions (CPM)
Pay each time your ad is viewed, regardless of clicks.
Pricing is per one thousand views: a CPM of £10.00 means you pay one penny each time your ad is displayed (£0.01 x 1,000 = £10.00). If you want to show your ad to as many people as possible and you care less about clicks, this may be the right choice for you.
Each time you set up an ad group, you can enter a default maximum CPM bid, which is the most that you're willing to pay for 1,000 impressions.
Cost per acquisition (CPA)
Pay only when you acquire a new conversion.
Set a target CPA – the amount that you're willing to pay for each conversion – and the Conversion Optimiser takes care of the rest, managing your bids so your ad shows in the auctions most likely to lead to conversions. If your goal is to increase online transactions, this is the one for you.
Money Saving Technology
Pay less for certain clicks with Smart Pricing
Google's Smart Pricing automatically lowers the cost for clicks on pages on the Display Network that are less likely to convert into customers. For example, if you sell tennis rackets, you might pay less for a click from a tennis news site than from a site that reviews tennis equipment as people reading reviews are more likely to be buyers. You can pay less per conversion with Smart Pricing on the Display Network than on the Search Network.
Keep your costs down with AdWords Discounter
The AdWords Discounter monitors your competition so you pay the lowest price to keep your ad's position on the page. After each auction is run and your ad is ranked, the AdWords Discounter adjusts your actual cost per click, so you pay the minimum amount required to exceed the rank of the next ranked ad.
Gain more for less with Conversion Optimiser
The Conversion Optimiser uses your AdWords Conversion Tracking data to get you more conversions at a lower cost. How does it do that? Well, Google technology finds your best auction placements, in other words, the ones most likely to turn into conversions for you. Then it adjusts those placements to get as many profitable clicks as possible.
Campaigns adopting the Conversion Optimiser achieve, on average, a 21% increase in
conversions while decreasing their CPA by 14%. 
Find out more about Conversion Optimiser
Display Campaign Optimiser
The Display Campaign Optimiser increases conversions by automatically managing the targeting and bidding for campaigns on the Google Display Network, so you don’t have to lift a finger.
Once you have set your target cost per acquisition (CPA), the Display Campaign Optimiser automatically finds the best placements for your ads at the right price to help you boost your conversions.
 This analysis compares the performance of the Conversion Optimiser campaigns with a control set of campaigns and represents the average impact of the Conversion Optimiser. The actual impact will vary from campaign to campaign (and a small number of advertisers could conceivably perform better without the Conversion Optimiser).