Question: All other things being equal, if you’ve set a maximum CPC bid of $1.00 for your ads, and if the next most competitive bid is $0.50 for the same ad position, what is the actual amount you’d pay for that click?47
Correct answer is: 51
The amount you’d actually spend for that click would be 0.51 in the event that the most competing price would be USD $0.50 in the exact ad spot.
For ads that are on the Search Network, the minimum Ad Rank that is required for advertisements above results of a search is usually higher than the Ad Rank for ads that are placed next to results from searches. Therefore, the actual cost of advertising for ads that appear above search results might be greater that the CPC you actually pay, if you are placed next to search results, even though there are no other advertisers immediately below yours. While you could cost more per visit, the top advertisements typically offer higher clickthrough rates and could allow you to display specific ads and other features only available in the highest ad positions. You’ll never be paid more than your maximum. CPC. CPC.
If the advertiser directly below you has bid US$2.00 and the advertiser’s advertisement is of similar to yours (and is able to perform similarly in terms of extensions and formats) it’s likely that you’ll have to pay a penny greater than US$2.00 to get a higher rank than the advertiser in order to keep your position and formats. With AdWords this is the highest price you’ll have to pay (about US$2.01) regardless of regardless of your bid being US$3.00, US$5.00, or higher.
Learn more here: https://support.google.com/google-ads/answer/6297
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