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CPC Ads & CPM Ads compete in same auction on Google Display Network?

Level 6

Hi Guys,

 

I am little bit confused about what will happen when CPA ads & CPM ads competes with each other in the same auction on GDN. What is the effective way to handle at this sitution? I have gone through tutorials but not getting exact idea about at this situation how adwords do? Kindly suggest!

2 Expert replyverified_user

Re: CPC Ads & CPM Ads compete in same auction on Google Display Ne

Google Employee

Hi Rachit, 

 

Both CPA and CPM bidding automatically get an equivalent CPC bid in order to be entered into the auction. For CPA, the equivalent bid is based on the historical conversion information in the given campaign. For CPM the auction pulls from the the historical CTR. 

 

Once these equivalent CPCs are established, they are then entered into the auction with the other CPC bids. Where a CPA and CPM bid are competing with each other, it is the equivalent CPC bid from each that will be used. 

 

Let us know if you have any further questions about this, 

Hannah

Re: CPC Ads & CPM Ads compete in same auction on Google Display Ne

Level 6
Thanks Hannah,

According to you CPM bid would be equivalent to CPC bid?

Re: CPC Ads & CPM Ads compete in same auction on Google Display Ne

Google Employee

Hi Rachit, 

 

No, the CPM and CPC aren't equivalent. The equivalent CPC bid is variable and will totally depend on the CPM bid and the historical CTR for that placement. 

 

Let us know if you have any other questions. 

Hannah

Re: CPC Ads & CPM Ads compete in same auction on Google Display Ne

Level 2

AdWords system converts the CPC ad's bid to: An effective CPM conversion

 

By

Adwods Exam

 

 

 

Re: CPC Ads & CPM Ads compete in same auction on Google Display Ne

Level 1
What happens if there's no historical data?

Re: CPC Ads & CPM Ads compete in same auction on Google Display Ne

Level 2

Friends,

 

Can someone add up a practical example to this given answer?

 

Thanks

Re: CPC Ads & CPM Ads compete in same auction on Google Display Ne

Level 16
When CPC and CPM ads compete for the same Display Network placement, adwords uses eCPM to compare ad rank. AdWords converts CPC to ECPM ( CPC equivalent bid) Google estimates how many clicks the ad might receive in 1000 impressions to get the comparison, the resulting figure is the ad’s eCPM, or effective cost per impressions.

The two types of ads (CPC & CPM) are compared apples-to-apples on how much they're effectively willing to pay for the impression. With a CPM ad (it's the same) the max CPM bid represents how much the advertiser is willing to pay for each 1000 impressions; with a CPC ad, Google estimates how many clicks the ad might receive in 1000 impressions to get the comparison (This's called ECPM).

Re: CPC Ads & CPM Ads compete in same auction on Google Display Ne

Top Contributor

Hello Rachit,

 

According to AdWords Help Center - 

 

When CPC and CPM ads compete for the same Display Network placement, the two types of ads are compared apples-to-apples on how much they're effectively willing to pay for the impression. With a CPM ad, the max CPM bid represents how much the advertiser is willing to pay for each 1000 impressions; with a CPC ad, Google estimates how many clicks the ad might receive in 1000 impressions to get the comparison.

 

My understanding on the scenario says- AdWords converts CPC to to an estimated maximum CPM to compare it with a regular CPM ad. 

 

Let's take an example:

 

Ad A (CPM) gets 10 clicks on 1000 impression on an average and the Maximum Bid for the same is Rs150 for 1000 impression

 

Ad B (CPC) has the maximum CPC of Rs 14 

 

Now here AdWords will take an estimated CPM of Ad B. Based on its historic CTR, it will estimate the number of clicks Ad B would get on 1000 impression. Say, Ad B would get 12 clicks (based on its past CTR)

 

So, the Bid for CPM of Ad B based becomes 14x12 = Rs 168

 

Therefore, it becomes easier to compare bids. All other factors of the auction remain as they may be. 

 

You talked about CPA, I could not find any documentation for it separately. But as CPC is the base for CPA as well, I believe the same applies to CPA Vs CPM auction as well.

 

Thanks

Ratan

Re: CPC Ads & CPM Ads compete in same auction on Google Display Ne

Level 1
Ads using CPC bids are not allowed to compete on the display network.
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