AdWords Users, Listen Up

An issue often brought up by the advertisers that have just recently started up using AdWords and its specialized vocabulary of AdWords advertising is that of the cost-per-click (CPC) values and the ways they are determined.

Blake, of the Inside AdWords crew, wrote on the blog that is "the official source for information about AdWords", a more detailed explanation of each of the three values as follows:

"Minimum CPC: […] a minimum cost-per-click (CPC) bid is assigned to each keyword in your account based on its quality (as measured by its Quality Score). The minimum bid is typically the least amount you can pay per click in order for your keyword to show ads. It is important to note that minimum CPC is set by the AdWords system, and not by the advertiser.

Maximum CPC: Maximum cost-per-click (CPC) is set by you, the advertiser, and is the highest amount that you are willing to pay for a click on your ad. You can set a maximum CPC at the keyword or ad group level.

Average CPC: This is literally the average amount you pay each time someone clicks your ad. The Avg. CPC you see in your account is determined by totaling the cost of all clicks and dividing that total by the number of clicks."

That should clear things up quite a bit but here's an example to demonstrate how things really go with the three CPC's mentioned above: "if your ad receives three clicks, one costing $0.33, one costing $0.38, and the third costing $0.49, then your average CPC for those clicks is $1.20 divided by 3 clicks, or $0.40," he continues.

AdWords is Google's flagship advertising product and main source of revenue. AdWords offers pay-per-click (PPC) advertising, and site-targeted advertising for both text and banner ads. The AdWords program includes local, national, and international distribution. Google's text advertisements are short, consisting of one title line and two content text lines. Image ads can be one of several different Interactive Advertising Bureau (IAB) standard sizes.