How AdWords Bidding Works
A bid is the amount you're willing to pay per click, per thousand impressions, or per acquisition. Each time your ad is eligible to appear, an auction takes place among your ads and all the other eligible ads. Your bid is one of the factors that determines whether your ad shows, and in what position.
The most common type of bid is a maximum cost-per-click (CPC) bid. When you use CPC bidding, you pay only when someone clicks on your ad. Raising your CPC bid can improve your ad's position, and lowering your bid can decrease your ad's position. Keep in mind, however, that ads are not ranked solely by their bid.
- Ranking on the Search Network:
Ads are ranked on search pages based on a combination of the matched keyword's CPC bid and Quality Score. Quality Score is determined by the keyword's clickthrough rate (CTR) on Google, relevance of ad text, historical keyword performance, landing page, and other relevancy factors. Having relevant keywords and ad text, a high CPC bid, and a strong CTR will result in a higher position for your ad.
- Ranking on the Display Network:
Ads are ranked on Display Network pages based on the ad group default bid (when there aren't more specific bids that apply), the ad's past performance on this and similar sites, and the landing page quality. However, if you've set a Display Network bid or a bid for a specific placement, these will overrule the ad group default bid when your ad runs on the Display Network or the placement you've selected. These more specific bids affect your ad rank, so you might consider increasing bids for placements on which you'd like to rank higher.
