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CPC Confusion

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# 1
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I often see an amount being charged for a click that is substantially below the MAX CPC I've set, and yet the ad position is considerably below 1.  What is Google's goal when it charges for the click?  Why doesn't it take enough from me to put the ad in first position? I ok'd that with Max CPC.

 

Thanks.

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Accepted by Karl (Explorer ✭ ✭ ☆)
September 2015

Re: CPC Confusion

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# 3
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Hi Steve

 

Your actual CPC will often be below your max CPC. Your position is based on your ad rank

 

There is a really useful video from Google here about how the auction and your CPC is calculated.

 

That should hopefully explain everything clearly.

 

Cheers

Kane

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Accepted by Karl (Explorer ✭ ✭ ☆)
September 2015

Re: CPC Confusion

Top Contributor
# 6
Top Contributor

Hi Steve,

 

QS is a combination of the keyword/ad performance and the search query. QS is calculated for each query, it is not static. The QS you see in the interface is based on an exact match for the keyword, no matter the match type. It is the QS that would be calculated if the user entered the exact phrase that is your keyword.

 

More accurately, I believe, QS is based on the performance of the keyword within the AdGroup, once that keyword has achieved at least 1000 impressions. Keep in mind, the only way Google truly measures relevancy is CTR. That CTR includes within the AdGroup, within the Campaign, within the account, in the same display domain and across all accounts, pretty much in that order. Once the keyword receives 1000 impressions, the performance of the keyword within the AdGroup is the most important factor. Basically, Google counts "votes" by users to establish relevancy. Those "votes" take the form of clicks on your ad. The QS is not meaningless in any case.

 

Best of Luck!

 

Pete

 

petebardo -- Deadhead doing AdWords

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Re: CPC Confusion

Top Contributor
# 2
Top Contributor

Hi stevea,

 

Your ad position is not only dependant upon the max. CPC which you set. It also depends upon the Ad Rank and the Quality Score of your keywords too. The more the Quality Score, the lesser will be the Avg. CPC and higher will be the ad rank. So everything is interconnected.

 

You need to optimize your account w.r.t. the keywords to the best so that the Quality Score is good, Avg. CPC is low and ultimately your ad position improves. Practically, I don't think that it's possible for every advertiser to be on the top spot because there are only 3 ads which shows on top of the natural search engine results based on factors like relevancy, competitive bid, Quality Score etc... Keep optimizing your account for relevancy so that you attain better results.

 

Hope this helps!

Pankaj

Marked as Best Answer.
Solution
Accepted by Karl (Explorer ✭ ✭ ☆)
September 2015

Re: CPC Confusion

Explorer ✭ ☆ ☆
# 3
Explorer ✭ ☆ ☆

Hi Steve

 

Your actual CPC will often be below your max CPC. Your position is based on your ad rank

 

There is a really useful video from Google here about how the auction and your CPC is calculated.

 

That should hopefully explain everything clearly.

 

Cheers

Kane

Re: CPC Confusion

[ Edited ]
Top Contributor
# 4
Top Contributor

Hal Varian's tutorial videos are vintage classic content Smiley Happy

-Moshe


kanobart wrote:

Hi Steve

 

There is a really useful video from Google here about how the auction and your CPC is calculated.

 

 

 

Moshe, AdWords Top Contributor , Twitter | Linkedin | Community Profile | Ad-Globe
Did you find any helpful responses or answers to your query? If yes, please mark it as the ‘Best Answer’

Re: CPC Confusion

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# 5
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Thanks for the video link.  I've gone thorugh it a couple of times now.  One thing that the video makes clear is that quality score is not something that's assigned to a keyword or to an ad but always to a particular keyword AND ad in combination.  It's a measure of how well the two fit into each other.  But when you see a quality score assigned to a particular keyword in the keyword table, and the ad group has multiple ads that are rotating, which ad was used to form the quality score for that keyword?  Or what if you change the ad that runs with the keyword?  The quality score for the keyword doesn't change immediately, yet the old quality score shown for the keyword is now totally meaningless. 

 

Thanks for your thoughts.

Marked as Best Answer.
Solution
Accepted by Karl (Explorer ✭ ✭ ☆)
September 2015

Re: CPC Confusion

Top Contributor
# 6
Top Contributor

Hi Steve,

 

QS is a combination of the keyword/ad performance and the search query. QS is calculated for each query, it is not static. The QS you see in the interface is based on an exact match for the keyword, no matter the match type. It is the QS that would be calculated if the user entered the exact phrase that is your keyword.

 

More accurately, I believe, QS is based on the performance of the keyword within the AdGroup, once that keyword has achieved at least 1000 impressions. Keep in mind, the only way Google truly measures relevancy is CTR. That CTR includes within the AdGroup, within the Campaign, within the account, in the same display domain and across all accounts, pretty much in that order. Once the keyword receives 1000 impressions, the performance of the keyword within the AdGroup is the most important factor. Basically, Google counts "votes" by users to establish relevancy. Those "votes" take the form of clicks on your ad. The QS is not meaningless in any case.

 

Best of Luck!

 

Pete

 

petebardo -- Deadhead doing AdWords

Re: CPC Confusion

[ Edited ]
Badged Google Partner
# 7
Badged Google Partner

The long and short of it, is adrank.  Adrank = Max CPC X Quality Score. You can only "win" a certain position, regardless of your max CPC bid, dpending on your adrank, and the adrank (bid X QS) of your competitors.

 

Even if you had a QS of 10 for that KW, and your max CPC was (Dr. Evil pose) one million dollars, if a competitor has a max CPC bid of $1,000,001 (QS 10), they will have a higher adrank than you. However, if the next highest "bider" (also with a QS of 10) only has a max CPC bid of $1, then you shouldn't be charged any more than $1.01 for a click in the #2 pos.  The highest adrank advertisier should only actually pay $1.02 per click, for the #1 pos. in that scenario. You won't pay any more than you have to, for the adrank you have earned in the auction.

 

 Sorry if this was already covered. The system went down for maintenence last night before I could post this. Smiley Happy

Tom