How does AdWords works in terms of costs?
Whenever a user performs a search on Google, AdWords launches an auction between ads to determine which ads will be shown on the Google results page, and in what order. To place your ads in this competition, you define a bidding option in your account.
Most new users chose the option cost-per-click (CPC), which means they accumulate costs based on the number of clicks their ads get. If you use this option, the amount you are charged per click depends in part on the maximum cost per click selected in your account, also called maximum CPC bid. This is the maximum amount you are willing to pay for a click on an ad. In fact, you will only be charged the amount needed to maintain your ad’s position on the page.
Some other factors, such as the quality of the ad, determine the exact cost of a click on your ad. If you set a maximum CPC bid of €1 for your ads, the highest amount that you will pay when a customer clicks on your ad will be €1. In addition, if your competitors bid for the same position is only € 0.50, you pay only € 0.51 for your ad in the event of your respective ads are similar in all respects.
How to control your costs
There are several ways to control your costs:
Set a daily budget to limit your spending
Your daily budget shows how much you’re willing to spend each day for each campaign in your account. The size of your budget depends only on you and you can change this amount at any time. Once your budget is reached, your ads is shown less frequently or stops running at all that day.
On any given day, Google may allow a number of clicks up to 20% greater than the limit set by your daily budget. This is what we call overdelivery. Overdelivery can compensate for low traffic days during which your ads are getting less visibility. But even if the number of clicks or impressions go over your budget, your invoice does not exceed the set budget for a given billing period.
If your campaign budget is €10 per day for a full month, your monthly bill for this campaign will not exceed € 304 (€ 10 daily budget * 30.4 average days per month).
Adjust your bids
If you choose the bidding cost per click, you set a maximum CPC bid for your ads. You can reduce the amount of the bid, but in this case, your ad will be shown at a lower location on the first page of search results. As a general rule, the higher the maximum CPC bid, the better position on the page.
Create more relevant ads
To be sure you get the most out of your investment, it is important that your keywords and your ads are of high quality.
To try to show your ad on a better position on the page, you can increase your maximum CPC bid. But you can also improve your ad position without increasing your costs by optimizing the quality of your ads and your keywords.