AdWords
2.5K members online now
2.5K members online now
Get started with AdWords - learn the basics to get set up for success
Guide Me
star_border
Reply

How is the cost per click calculated?

Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

How is the cost per click calculated?

2 Expert replyverified_user

Re: How is the cost per click calculated?

Top Contributor
# 2
Top Contributor
The cost of the click on your ad is determined by the results of an auction between you and your competitors - i.e. all the other advertisers who are bidding on that same keyword.

However, the value of your bid is adjusted depending upon the Quality Score of the keyword - so the higher your QS the more your bid is actually worth. Thus, two people both bidding $1 on the same keyword will not have "equal" bids - instead their bid is adjusted by their QS so if one has a QS of 6/10 and the other has a QS of only 3/10 - the one with 6/10 will "win" the auction and get the ad slot - the competitor will get the next ad slot down (dependingupon other competitors in the auction)

This is a simplified version of what actually happens - but it will give you an understanding of how the auction works. Bear in mind also that you do not pay your full bid - you will only pay what you need to pay to beat your competitor's maximum bid for the ad slot. So if your bid is $1 and your competitor's is 50c - you will pay 51c, not your $1 bid amount.

Re: How is the cost per click calculated?

Top Contributor
# 3
Top Contributor

Check this video by Google:

 

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: How is the cost per click calculated?

Top Contributor
# 4
Top Contributor

ohhh... @stickleback  and I answered at the same minute. You have it in writing and in video...

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: How is the cost per click calculated?

Visitor ✭ ✭ ✭
# 5
Visitor ✭ ✭ ✭
cost per click is basically calculated basis what your competitors a paying there is auction that happens at the backend automatically when u type any query in the google to look for ,these query are called keywords in adwords ,so say if one competitor pay 4 inr for a query ie buy shoes online and other competitor also wants same keyword in his ad he might pay 4.10 inr so this is how the amount gets set ,but its an on going process as everytime the query is put in google it automatically goes into auction as there is an algorithm that runs it ,
For detail understanding follow this link
https://support.google.com/adwords/answer/2615875?hl=en

Re: How is the cost per click calculated?

Follower ✭ ☆ ☆
# 6
Follower ✭ ☆ ☆

Let me attempt to explain how ad ranks and CPC is calculated which is interlinked topic. 

 

•Ad position is determined by relevance and how much you’re willing to pay
•The guy below me sets the price: my cost is $0.01 more than I’d pay to be in his spot
•Improving quality score is a cost-effective way to move up in ad position

 

See the example with a small calculation

 

bidding4position1.png2.png3.png4.png