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Lessons Catalogue
Lesson 5a: Cost Control
How Google Controls Costs
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Objective: Learn how AdWords helps keep your costs down with the AdWords Discounter and smart pricing.
With Google AdWords, you set a cost-per-click (CPC) bid or cost-per-1000-impressions (CPM) bid. However, the AdWords Discounter works so you usually end up paying less than this amount.
Here's how it works: After we determine your ad rank, the AdWords Discounter calculates your actual CPC or CPM. This is the actual amount you pay to maintain your ad's position above the next lower ad. Your actual CPC or CPM is never more than the maximum CPC or CPM bid you specify.
Google Network bids may be different from Google web search bids. Using smart pricing, AdWords may automatically lower the maximum cost-per-click (CPC) bid for keyword-targeted ads that appear on Google Network pages. While you set one maximum CPC bid, if our data shows that a click from a Google Network page is less likely to turn into actionable business results - such as online sales, registrations, phone calls or newsletter sign-ups - we may reduce the bid for that site.
For example, let's say that you advertise digital cameras. Your ad appears on two different pages - a Google web search page for the keyword 'digital cameras' and a Google Network page. If Google determines that your ads are not likely to perform as well on the Google Network page as on Google web search, AdWords may reduce the maximum CPC bid for that site.
Smart pricing reductions are automatically reflected in the Avg. CPC column on your Campaign Summary page.
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