1.c - Pricing and Ranking

Paying for AdWords:

The Price
- No minimum spending requirement: 1 time, $5 adtivation fee.
- In a Standard Edition account, you control your costs through: daily budget, bids, account's quality.

Daily Budget: The spending limit you set on each campaign
- AdWords recommends a daily budget
- Ads display evenly throughout the day
- Change your daily budget as often as you like

Bidding: 2 Types of ad campaigns
- Keyword-targeted: you set a cost-per-click (CPC) bid for each ad group or keyword in your campaign.
- Placement-targeted: you set a cost-per-thousand impressions (CPM) bidding for each ad group or placement in your campaign. Contains keywords, but displays only at certain locations.

Ad Positioning: Keyword-targeted ads are positioned based on rank number

Ad rank number = CPC bid x Quality score

Actual CPC

Ads ---- CPC Bid --- Quality Score ------- Rank # ------- Position --- CPC
Ad A --- $0.40 --------- 1.8 -------- $0.40 x 1.8 = .72 ------ 1 ------ $0.37
Ad B --- $0.65 ---------- 1 ---------- $0.65 x 1 = .65 ------- 2 ------ $0.39
Ad C --- $0.25 --------- 1.5 -------- $0.25 x 1.5 = .38 ------ 3 ------ $0.01

Quality Score & Minimum Bid
- Quality Score sets the minimum bid
- If your CPC bid is less than the minimum bid, your keyword will be made inactive
- Improving quality is the best way to keep your costs down

Ad Ranking: maximum CPC or maximum CPM & Quality Score
- Ads are positioned based on rank number: Position is calculated per keyword
- You only pay the CPC necessary to have a rank number higher than that of next lowest ad