What is CPC bids?

What is CPM bids?

Maximum CPC bid: A bid that you set to determine the highest amount that you're willing to pay for a click on your ad

There are two main types of bidding within Google AdWords – Cost Per Click (CPC) and Cost Per Thousand Impressions (CPM).

Within this blog I’m going to give you a breakdown of what both these bidding strategies mean and when you would best use each one.

If someone clicks your ad, that click won't cost you more than the maximum cost-per-click bid (or "max. CPC") that you set. For example, if you set a $2 max. CPC bid, you'll never pay more than $2 for each click on your ad. The actual amount that you pay is called the actual CPC and is shown in your account's "Avg. CPC" column.
A higher bid generally helps your ad show in a higher ad position on the page.
You'll choose between manual bidding (you choose your bid amounts) and automatic bidding (you set a target daily budget and the Google Ads system automatically adjusts your max. CPC bids on your behalf, with the goal of getting you the most clicks possible within that budget). With manual bidding, you'll set one maximum CPC bid for an entire ad group, but can also set different bids for individual keywords.

Cost Per Click (CPC) Bidding

CPC bidding is where you only pay if someone clicks on one of your ads.

In most cases people will generally use CPC bidding as it is designed for the Search Network. It’s also the recommended bidding strategy when trying to drive traffic to your website and you know how much you are willing to pay.

Within CPC bidding there are two separate bidding options available:

Automatic Bidding

Where you set a daily budget and Google AdWords will attempt to bring you as many clicks as they can for your set budget. You can also set a maximum cost per click to make sure Google doesn’t spend more than you would. If you use automatic bidding I would highly recommend setting a maximum CPC!

Manual Bidding

You only pay when someone clicks on your advert but this option allows you to control your maximum bids. You can set bids at the Ad Group level, keyword level or placement level. I personally like this option as I feel it gives you more control over what you spend per click.

Cost Per Thousand Impressions (CPM) Bidding

Cost Per Thousand Impressions (CPM) is totally different to CPC as your bidding is focused on the number of impressions of your advert receives rather than the number of clicks. CPM is charged per thousand impressions your ad receives.

CPM bidding is the most common option for advertisers who are targeting the Display Network as this is the best option if you are trying to increase or improve your brand visibility.

There is one downside that this bidding strategy brings which is the fact that you could potentially pay for a thousand impressions but receive no clicks to your website.

On the other hand a benefit of CPM ads are that the display network is solely judged on price so if it has the highest bid it will rank at number 1, whereas CPC bids are judged on CTR, Quality Score and other relevance factors.

To summarise, both bidding strategies are different but both have their own benefits and drawbacks. They can be used for different campaign goals such as driving traffic to your site or driving brand awareness. CPC bidding is mainly used for Search Network campaigns and CPM bidding is primarily used for Display Network campaigns.