Cost-per-view (CPV)

Cost-per-view (CPV) bidding is the default way to set the price you'll pay for your AdWords video ads (when created with AdWords for video). While traditional display ads charge you for impressions, with CPV you pay only when a viewer watches your video.

With traditional online text ads or image ads, customers on the web may see your ad, read its text, and click your URL to go directly to your site. This type of interaction doesn't take interactive content like video ads into account. With CPV bidding, you won't be charged for just an impression or a video interaction click on your ad.
With AdWords for video reporting, you're able to evaluate how engaged viewers are with your content, where they choose to watch your videos, and when they drop off from watching your content.

Setting a CPV bid

To set a CPV bid, you enter the highest price you want to pay for a view while setting up your AdWords for video campaign. Your bid is called your maximum CPV bid, or simply "max CPV." This bid applies at the campaign level, but you can also set a CPV bid per ad format.

Example

If you think it's worth 25 cents to have someone watch your video, you can set US$0.25 as your max CPV. For an in-display TrueView video ad, you'll pay a maximum of US$0.25 when users begin watching your video. For in-stream, you'll pay the maximum CPV when the user watches 30 seconds or sees the end of the ad, whichever comes first. You pay nothing if they don't initiate the video or drop off from the video before the minimum amount of time passes.
You can also set a lower bid for your in-display TrueView video ads than for your in-stream video ads.

Tips

The amount of time required for a video play before you'll be charged depends on the video ad format. Check out the available AdWords for video formats to learn more.

How CPV affects your ad rank

The max CPV you set helps determine your ad's position among other ads on search results pages in the Search Network (including YouTube search results) and Display Network pages (which include YouTube as a publisher).
In both cases, a higher CPV will increase your ad's chances of appearing, and increase your ad's chances of appearing in a higher position compared to other advertisers' ads.

Your actual CPV

Your maximum CPV bid is the most you'll be charged for a video view, but you won't always be charged this maximum amount. Wherever possible, we'll try to charge you only what's necessary for your ad to appear on the page. The final amount you actually pay for a view is called the actual CPV.
Actual CPV is often less than max CPV because with the AdWords auction, you pay no more than what's needed to rank higher than the advertiser immediately below you.

Example

Let's say your max CPV is $5.00, and there are two other advertisers in the auction with you with the same Quality Score. One bids a CPV of $1.00, and another bids a CPV of $3.00. Since there are no other competitors bidding more than $5.00, you're the top bidder. However, we're not going to charge you $5.00 if your closest competition is only bidding $3.00. We'll charge you $3.01 for your video play.

Two other elements affect the actual CPV you pay: Quality Score and ad rank. Your Quality Score is a measure of how relevant your ad is to a customer, and includes multiple performance factors like view rates. Once your Quality Score is determined, it's multiplied by your max CPV bid to rank your ads among other advertisers. That's called Ad Rank.
Once all ads have been ranked, the actual CPV for your ad is based on an equation that considers the ad rank of the bidder below you and your Quality Score.
The highest ranked ad wins the highest placement on the page, and the cost for a video play for this ad (the Actual CPV) will be just above the CPV bid of the next ranking ad.

How to set your CPV bid

You can set your max CPV bid when setting up your campaign as you select your targeting groups. You can select a default max CPV bid for all ads associated with a targeting group, or define an individual CPV bid per TrueView video ad format. You can also set a unique bid per targeting type (placements, keywords, topics, etc.).

How to decide what CPV bid amount to set

How do you know what CPV to set? You can base this amount on the traffic forecasting data we present as you select your targeting settings and max CPV when building a new campaign (or managing your targeting groups later). You can also base this on what you know about your business and the value of a sale.  For example, if you sell handcrafted jewelry pieces that cost US$1,000 each, one new customer is probably worth more than if you sell books for US$8.00. You may set a CPV of $50 for your jewelry ads, and a CPV of $1.00 for your books.

Using flexible bid strategies

• Flexible bid strategies automatically set bids to optimize for your performance goals across specific campaigns, ad groups, and keywords.
• Once you create a strategy, it will be stored in your Shared library for centralized management and performance tracking. You can apply your strategy from the Campaigns, Ad groups, or Keywords tabs.

Benefits of flexible bid strategies

Flexible bid strategies give you automated bidding exactly when, where, and how you want it -- across multiple campaigns, or within a single part of a campaign.
For example, by applying the "Maximize clicks within target spend" strategy to your lower priority keywords, AdWords automatically optimizes their bidding, while you retain manual bidding control over your most important keywords. Or you can apply the "Target search page location" strategy to important keywords across your campaigns to increase the likelihood that your ads show as much as possible on the first page of Google Search.
To help improve your performance in ad auctions, some strategies adjust bids using real-time details like device, browser, location, and time of day. Some strategies also will automatically adjust bids based on whether or not someone is on one of your remarketing lists.

Types of flexible bid strategies

	Flexible bid strategy	When to use it	Where to apply it
1	Maximize clicks automatically sets bids to help you get the most clicks within a target spend amount that you choose. Flexible version of automatic bidding	When site visits are your primary goal When you want to maximize traffic on long tail terms while keeping within a certain spend	Campaigns, ad groups, keywords
2	Target search page location automatically adjusts bids to help you get your ads to the top of the page or the first page of search results. New bid strategy	When you want more visibility on the first page of Google search results or in the top positions	Campaigns, ad groups, keywords
3	Target cost-per-acquisition (CPA) automatically sets bids to help you get as many conversions as possible while reaching your average cost-per-acquisition goal. Flexible version of Conversion Optimizer	When you want to get the most conversions with your target CPA	Campaigns, ad groups
4	Enhanced cost-per-click (ECPC) automatically adjusts your manual bid up or down based on each click’s likelihood to result in a conversion. Flexible version of Enhanced CPC	When conversions are the main objective, but you also want control over your keyword bids	Campaigns, ad groups
5	Target return on ad spend (ROAS) automatically sets your bids to maximize your conversion value, while trying to reach an average return on ad spend. New bid strategy	When you value conversions differently, and want to meet a target ROAS	Campaigns, ad groups, keywords

Tip

You may see different options in your campaigns' Settings tab. This is because different campaign types support different features. To see which features are available by campaign type, read Choose the campaign type that's right for you

Creating and managing flexible bid strategies

Tip

You may need to add the "Bid strategy" and "Bid strategy type" columns in order to view bid strategy details in your statistics tables. Learn how to add columns.

Next steps

• Determine a bid strategy based on your goals
• Choose a bid amount that works for you

Cost-per-click bidding

What it does

Cost-per-click (CPC) bidding is one of several bidding methods that you can use to determine how you want to pay for user interactions with your ads. With CPC bidding, you’re charged for your advertising activity only when users click on your ads.
Think about billboards: Advertisers pay for billboard space based on how many people might see their ad as they drive by, whether those people actually notice the ad or not. Internet ads are different: With AdWords CPC bidding, you only pay for Google's "billboard space" when you know users saw your ad and were motivated enough to click. If 100 people view your ad and three click it, you pay for the three clicks, not for the other 97 views. This bidding method gives you good value because you pay only when a viewer is interested enough to click your ad and learn more.

Choosing a max. CPC bid

When setting up a campaign with CPC bidding, you have the option of limiting the amount you’re willing to pay for a click by using a maximum cost-per-click bid - or simply "max. CPC" (unless you're setting bid adjustments, or using Enhanced CPC).
How do you know what max. CPC to set? You can figure this out based on what you know about your business and the value of a sale. For example, if you sell $5,000 diamond rings, one new customer is probably worth more than if you sell $0.99 packs of gum. One helpful tool in establishing CPC bids is Keyword Planner: it shows you how often some keywords get searched, and gives you cost estimates at a glance.
Note that often you'll pay less than your max. CPC because with the AdWords auction, the most you'll pay is what's needed to rank higher than the advertiser immediately below you. Read the section below to learn more about the final amount you're charged for a click.

Example

If you think it's worth 25 cents to have someone visit your website, you can set $0.25 as your max. CPC. You'll pay a maximum of $0.25 when a person reads your ad and clicks it, and you pay nothing if they don't click.
Let's say you create a text ad and set a max. CPC bid of $0.25. If five hundred people see the ad, and 23 of them click to learn more, you pay only for those 23 clicks. Your max. CPC bid was $0.25, so you'll pay no more than 23 clicks x $0.25, or $5.75.

The final amount you're charged

Your max. CPC bid is the most you'll be charged for a click, but you'll often be charged less - sometimes much less. That final amount you're charged for a click is called the actual CPC.
Actual CPC is often less than max. CPC because with the AdWords auction, the most you'll pay is what's minimally required to hold your ad position and any ad formats shown with your ad, such as sitelinks. You pay just enough to beat the Ad Rank of the advertiser with the next highest Ad Rank (or the minimum Ad Rank necessary to appear in that position). You can learn more about Ad Rank and actual CPC by watching the video below.

How to enter or edit your CPC bid

When you first set up a campaign and ad group, you’ll be asked to select a bidding strategy at the campaign level. With CPC bidding you have the following options:

• Manual bidding: You select “I'll manually set my bids for clicks” and choose your own bid amounts.
• Automatic bidding: You select “AdWords will set my bids to help maximize clicks within my target budget” and let AdWords set your max. CPC for you. With automatic bidding, you're telling us, "Set my max. CPC bids to get me as many clicks as you can given my overall budget."

If you choose the “Advanced options” when setting up your campaign for the first time, you’ll have the opportunity to set a max. CPC, shown as the CPC bid limit, that will apply to all of your ad groups by default. If you do not enter a CPC bid limit for your campaign, you may be charged any amount for a click within your daily budget. Note that you can edit your CPC bids at any time.

For new and existing campaigns you can apply your max. CPC bid several ways. Let's say you have a bakery, and you've set up a "breakfast" ad group with keywords like donuts, crullers, and apple fritters. Here's how you might set and edit your bids:

• If you want all the keywords in an ad group to have the same bid: Set an ad group default bid. If you choose a $1 CPC, then that's your max. CPC when someone searches for donuts, crullers, or apple fritters -- any of your keywords. The same bid applies to placements if you're running your ad on the Display Network. This is the easiest way to manage your CPCs.
• If you want the keywords in an ad group to have different bids: Set keyword bids. For instance, if you know that people who search for apple fritters tend to buy more than people searching for donuts, then you might bid $1.25 for each click on apple fritters and $1 for each click on donuts.
• If you want your Display Network targeting methods to have different bids: You can set a max. CPC for placements, topics, or other targeting methods. For instance, you can try to help your ad show on a donut recipes website by setting a custom bid for that particular placement on the Display Network tab.

Learn how to edit your bids.

Fix a problem with CPC bidding

Next steps

• Choose your bid and budget
• Learn more about actual cost-per-click
• How to set bid adjustments

A common AdWords misconception explained...

One great thing about having a large audience of AdWords advertisers is that it makes this blog an ideal place to clear up things which might be called common AdWords misconceptions. Take, for example, the misconception exemplified by the question below -- paraphrased from a post in the AdWords Help forum:

I advertise a niche product, and I'm the only advertiser on many of my keywords. I thought I could bid the minimum CPC of $0.01 on those keywords, and have my ad show. Yet, my minimum bid is much higher. What's up with that?

Good question. Let's start by first defining what minimum bid really means:

The minimum bid, also known as the minimum CPC, is the least that one can pay to have an ad appear for a particular keyword in a particular account. It is very important to know, however, that one's minimum bid is entirely unrelated to how many other advertisers are using the same keyword. Instead, since August of 2005, the minimum bid has been quality based. To put it simply, the higher the Quality Score of a keyword, the lower one's minimum bid will be for that keyword.

So, very low minimum bids are earned by creating highly relevant ad text and keywords that get outstanding Quality Scores. And only the most relevant keyword and ad text combinations will earn a minimum bid of $0.01 (or its equivalent in other currencies).

It's worth noting that every keyword has a minimum bid that is unique to how successfully that word has been used in an advertiser's particular account. So the minimum bid for the keyword 'Kansas City BBQ sauce' will be different in your account than in your next door neighbor's account, who happens to be using the same keyword.

How can you lower your minimum bid? The short answer is to improve your Quality Score by optimizing your ads.

minimum click cost

I'm wondering how Google handles clicks for keywords that have no other bids. Suppose you wanted an ad to come up when someone searched for "antiques in Smalltown"  where "Smalltown" is some imaginary small town, and no one else in Smalltown had an adwords account, let alone one that was bidding for the keyword "antiques in Smalltown."   To limit the situation still more, you would have Location for the campaign set down to the smallest area possible around Smalltown to exclude any activity that might occur in other possible Smalltowns in  the world. .  What might you have to pay for that click?  The CTR will be virtually zero, probably, because not that many people are going to be searching Google for "antiques in Smalltown," maybe one a day, if that, so the quality score for this keyword will be very low, but with the next lowest bid being 0, the cost shouldn't be much - maybe a penny?

Minimum Bid - Learn About AdWords Minimum Bids

"Minimum bid" was previously shown within Google AdWords accounts. While it is still displayed in Yahoo! Search Marketing accounts, the metric has been replaced within AdWords by "first page bid". Despite this fact, there is still a minimum amount you'll have to pay to see your ad displayed, and it is still relevant to your pay-per-click efforts and AdWords bid management strategy. In this tutorial you'll learn:

• What minimum bid means.
• The importance of minimum bid to you and your PPC accounts.
• How to lower your minimum bids and optimize your paid search accounts.

so what is minimum bid, anyway?

Minimum bid refers to the minimum amount you are able to pay for each click to have your ad displayed against a query. Minimum bid, or minimum CPC (cost-per click) bid, lets you know how much you have to set your maximum bid to have your ad show for a given keyword (first position bid operates in the same way, with the exception being that you are told how much you have to pay to appear on the first page of search results).

adwords minimum bid calculation

Minimum bid works similarly across the engines. Each of the major search engines (Google, Yahoo!, Live) feature a variation of Quality Score. Google, for instance, notes that:
"A minimum cost-per-click (CPC) bid is assigned to each keyword in your account based on its quality (or Quality Score). The minimum bid is usually the lowest amount you can pay per click in order for your keyword to show ads."
So, lowering your minimum bids (and thus your cost-per click) is dependent upon raising your Quality Score.

lowering your minimum bid for ppc

The major factors you need to be concerned with in achieving a high Quality Score for minimum bid are:

• High click-through rate - Your ads are clicked on often by searchers.
• Tightly related Ad Groups - The keywords within your Ad Groups are deemed "related" by the search engines.
• Relevant Ad Text - The text contained in your ads relates to the keywords and queries you are attempting to have it shown in response to.
• Relevant landing pages - You send people to a page that has content related to your ad and their query.
• Historical Performance  - You do all of the above things, repeatedly.

This means you need to create strategically-constructed groupings for your keywords, relevant ads (that people will want to click on), relevant landing pages, and do it all over, and over, and over again.

lower your minimum cpc with WordStream

WordStream is specifically designed to automate and facilitate Quality Score improvements as an AdWords bid tool. Additionally, the ad software is designed to accumulate and manipulate voluminous long tail keyword lists for your AdWords bidding strategy.
First, WordStream offers analytics and keyword research tools to help you create a keyword database.
Next, you're offered keyword grouping suggestions by the software:

Here we see WordStream offering keyword suggestions to a hardware retailer that sells a number of power tools on their site. As you can see, WordStream has scanned the retailer's keyword database and offered suggestions for groupings based on group size and impact (site visits).
Additionally, WordStream offers automated ad text suggestions. So, having taken the grouping tools at their word and created the highest impact group possible, we can now quickly create Quality Score friendly ad text for that group:

Note that this is not a finished ad. It lacks a clear call to action, proper punctuation, and a clear, concise message.
What it has is a set of keyword recommendations that will improve your click through (as they are relevant keywords contained within your Ad Group) and increase your Quality Scores.
This same list of key phrase suggestions can be applied to landing page creation; you can implement these keyword suggestions in prominent locations (headers, call outs, etc.) and utilize the group's other keywords throughout the page copy.

the WordStream impact on minimum cpc bids

If you're interested in seeing how WordStream's bidding software impacts Quality Score and ultimately your minimum bids, you can:

• Try WordStream Free Today
• Request a Live Demonstration
• Sign up for our Search Marketing Webinar
• Subscribe to our Newsletter

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