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Lessons Catalogue
Lesson 1c: Pricing & Ranking
Paying for AdWords
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Objective: Learn how much AdWords costs. Understand how your daily budget, CPC or CPM bid and Quality Score influence the amount that you will pay.
AdWords does not have a minimum spending requirement — just a nominal, one-time activation fee. You set your spending limits, depending on your advertising goals. In addition, you only pay for clicks or impressions that your ad receives. You control your costs through:
- Your daily budget
- Your CPC and CPM bids
- Your Quality Score
Your daily budget is the amount that you are willing to spend on a specific campaign each day. We will show ads within a campaign as often as possible to meet your daily budget.
To help you set a daily budget that maximises your ad's visibility, AdWords provides daily budget recommendations within your account. These recommendations are based on historical click data for the same or similar keywords that you choose for your ads, among other factors.
If your daily budget is lower than the AdWords recommended amount, your ads may not appear all the time. Should this happen, we will display your ads intermittently throughout the day so that they will not stop showing altogether (per standard delivery settings.)
Setting your daily budget to the amount that we recommend is optional — you are always in full control of your AdWords account and you can edit your campaign's daily budget as often as you like.
To learn more about setting your daily budget, see the Cost Control lesson.
In campaigns targeted to the search network, you set a cost-per-click (CPC) bid for each ad group or keyword in your campaign. Your CPC bid refers to the amount that you're willing to pay for a click on your ad when the ad appears on Google or one of our partner sites.
In campaigns targeted to the content network, you choose to make either a CPC bid or a cost-per-thousand impressions (CPM) bid for each ad group, keyword or placement in your campaign. A CPM bid refers to the amount that you're willing to pay each 1000 times your ad appears on one of Google's partner sites. That means that you pay when your ad shows, whether or not a user clicks the ad.
Placement targeting is covered in more detail in the Placement Targeting lesson. CPM bidding is not available for campaigns that target the search network. CPM bidding is available for campaigns that target only the content network.
With both CPC and CPM pricing, you're in control of your bids. In addition, AdWords helps keep your costs to a bare minimum with the AdWords Discounter and smart pricing. To learn more about these methods, visit the Cost Control lesson.
Quality is the most important factor in determining the cost that you will pay when someone clicks on your keyword-targeted ad. Your Quality Score (which is determined by your keyword's CTR, relevance of ad text, historical keyword performance and other relevancy factors) sets the minimum bid that you will need to pay in order for your keyword to trigger ads. If your CPC bid is less than the minimum bid assigned to your keyword, you will need to either raise the CPC to the minimum bid listed or optimise your campaign for quality. For more information on optimisation, please visit our Keyword Optimisation lesson.
It is important to remember that the higher the Quality Score, the lower the minimum bid and cost that you will pay when someone clicks on your ad. Therefore, the best way to drive your advertising costs down for keyword-targeted ads is to maintain high-quality keywords, ads and campaigns.
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