CPC means Cost Per Click. it’s related to Google Ad. So the question is how does Google AdWords decide the minimum bid required for your ad. It’s a great question and there is a very super simple and super clever formula devised, by Google to calculate just that.
What Full Form of CPC?
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So, the question is how does Google decide the min. bid for ad or advertiser, don’t worry, I will help you to understand the simple formula which has been devised by Google.Google calculates your costper click. Okay so as you may know every keyword has a quality score, between one and ten one being the worst ten being the best.
So you want to aim as high as possible because it’s going to affect your cost per click.
As you call it the score goes up you get a discount and the quality the score goes down you get charged more by Google.
So the minimum you need to start with is five which is the Google benchmark, so always aim for a minimum of five
as your starting quality score and then keep on working to make, it as high as possible.
Okay so let’s work out your price, how does Google work out your price.
Get the formula, the ad rank of the advertiser, divided by your quality score, plus one penny so you will only pay a penny,
more than the second-best advertiser, so even if you bid a lot more, Google will not charge you that.
So, I will tell you that, the formula works, so we have here 4 advertisers ranked one two three and four,
now advertiser ranked number one is bidding a maximum of $2, $4, $6 and $8.
Although you may think that advertiser number four who’s bidding the most should be number one,
Google does not take into account that throwing more money at Google will buy you.
the highest position you can but it will cost you a lot more money.
but if you do it the Google way you are going to pay the least amount of money for the highest ad rank.
then we come on to college go advertise the rank number one has got a quality a score of ten, four, two and one.
So the way the ad rank is calculated is maxed bid times by the quality score, so 2 times 10 is 20, 4 times
4 16, 6 times 2 12, and 8 times 1 are 8 so the highest ad rank gets the highest position so far so good.
Now we need to work out or Google needs to work out how much the top-ranked
the advertiser is going to pay the second-ranked third and fourth,
The formula the ad rank of the advertiser is 16 so you put in 16 over there / your quality score which is 10 so 16 divided
by 10 plus 1 penny equals $1.61 and the same way is going to be worked out for all the other ranked advertisers.
And this is how advertisers ranked, the first person is paying almost, half of what the advertiser ranked number two is paying because of the quality Score.