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 that 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. The bidding feature makes this possible and helps you manage your budget to meet your specific advertising goals.
Choose the pricing model that's right for you:
Pay only when someone clicks your ad. If your goal is to drive traffic to a website, this is the right choice 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 that your ad will appear. If you choose automatic CPC bidding, you simply set a daily budget of how much you’re willing 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.
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. You might consider bidding higher for CPM ads because it must compete with multiple CPC ads and CPM ads for an entire ad space.
Set a target CPA - the amount you're willing to pay for each conversion - and the Conversion Optimizer 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 drive online transactions, this is the right choice for you.
BuyerZone's ability to use CPC rather than CPM pricing helped them increase their ROI from their advertising.