Your budget for AdWords is based on a daily spend, so at this stage you need to decide how much per day you want to spend on your advertising. Whatever you decide on is totally up to you and remember, you can alter this at any time.
The amount you are charged when your ad is clicked in an auction could well be less than your maximum CPC (Cost per click). This means that your actual CPC will probably vary from one auction to another. Be assured though, no matter how much your actual CPC varies, your daily budget puts a cap on how much you will pay with regard to click costs.
Changing Your Daily Budget
As I’ve mentioned above, you can edit your daily budget at any time. However, you need to be aware that if you should decide to lower your bid, it could result in your ads showing up in a lower position on the first page of search results. It could also mean that your ads are displayed in a different location, from the top of the page to the side or the bottom. It could even move off the first page of search results altogether. The rule of thumb is that a higher maximum CPC bid can allow your ad to show at a higher position on the page.
Based on the daily budget you have set, you can have your bids automatically updated. This means that the system will get you the most clicks possible for your daily budget. Unsurprisingly, this is called Automatic Bidding.
Quality score encourages high quality relevant ads, so the higher the quality of your ad, the less you will be paying for a given ad position. If your ad is low quality, the opposite will be the case. So therefore you can improve your ad position by working on the quality and relevance of your ad. The best thing about this is that you could get a higher ad position without it costing you anymore budget. It can also catapult you above a competitor, consider this, imagine your CPC is £4 and your competitors is £5. His ad quality is below average but you’ve spent time on yours and the quality is very good. In this case, your ad could appear in a higher position on the page, even though you have a lower bid.
Control Over Your Costs
So, as you know, AdWords gives you complete control over your advertising budget. There is no minimum amount that you have to spend. You set your budget and off you go. You can see your advertising costs, billing history and full reports at https://adwords.google.co.uk
CPM Bid. The numbers of times your ad is shown is known as cost-per-click. This is best used if you want to increase the awareness of your brand. (CPM bidding is available for Display Network Campaigns only).
CPC Bid. CPC or Cost-per-click bids are the recommended bidding option if you want to drive traffic to your website.
CPA Bid. Cost per Acquisition is when people take a specific action on your website after clicking one of your ads. This may be a sale or someone filling in a contact form for example.