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How do cost-per-click (CPC) ads compete with cost–per–thousand impressions (CPM) ads on the Display Network?
A) CPC bids are effectively coverted to CPM bids
B) CPM bids are effectively converted to CPC bids
C) Ads using CPC bids are not allowed to compete on the Display Network
D) CPC and CPM bids only compete against bids of the same type
Explanations:
When CPC and CPM ads compete for the same Display Network placement, adwords uses eCPM to compare ad rank. AdWords converts CPC to ECPM ( CPC equivalent bid) Google estimates how many clicks the ad might receive in 1000 impressions to get the comparison, the resulting figure is the ad’s eCPM, or effective cost per impressions.
To keep things fair, when CPC and vCPM ads compete for the same Display Network placement, the two types of ads are compared apples-to-apples on how much they’re effectively willing to pay for the impression. With a vCPM ad, the max viewable CPM bid represents how much the advertiser is willing to pay for each 1,000 viewable impressions; with a CPC ad, Google estimates how many clicks the ad might receive in 1,000 impressions to get the comparison.
Read more here: https://support.google.com/adwords/answer/2630842?hl=en
Many advertisers hope viewers will click their ad -- but that's not always the main goal. Maybe you just want a lot of people to see your ad. In that case, bidding by cost-per-thousand viewable impressions (vCPM) is a good way to go. With vCPM bidding, you bid for your ad based on how often it appears in a viewable position on the Google Display Network. You set the max amount you want to pay for viewable ads, whether they're clicked or not.
Why use vCPM bidding
Some people prefer vCPM bidding because they want to be able to set a maximum amount they'll pay for each time their ad can be seen, or each viewable impression, instead of for each click.
vCPM bidding is unavailable for the "Search Network only" campaign types.
Tip
If your main goal is online sales or visits to your website, then cost-per-click (CPC) bidding may be a better option for you.
A quick comparison of vCPM and CPC bidding
We'll get into a few more details below, but here are some of the basics:
| Viewable CPM bidding | CPC bidding | |
| Consider using this if: | You care more about your ads being viewed than about clicks generated | You care more about clicks |
| Bid: | Maximum amount you're willing to spend for 1000 viewable impressions | Maximum amount you're willing to spend for 1 click |
| Actual amount charged: | No more than what’s needed to rank higher than the advertiser immediately below you. You don’t pay for any impressions that were not viewable. What does "viewable" mean? | No more than what’s needed to rank higher than the advertiser immediately below you |
How vCPM and CPC bids compete
Ads with different bid types can compete for the same Display Network placements.
To keep things fair, when CPC and vCPM ads compete for the same Display Network placement, the two types of ads are compared apples-to-apples on how much they're effectively willing to pay for the impression. With a vCPM ad, the max viewable CPM bid represents how much the advertiser is willing to pay for each 1,000 viewable impressions; with a CPC ad, Google estimates how many clicks the ad might receive in 1,000 impressions to get the comparison.
How to use vCPM bidding
With vCPM bidding, you set the highest amount you want to pay for each 1,000 viewable ad impressions. We call this the maximum vCPM bid, or just "max viewable CPM." The higher your max viewable CPM, the greater the chance that your ad will appear. As always, the AdWords system will charge you only what is needed to place your ad above the next-highest ad, and only charge if the ad became viewable. How does AdWords know when ads are viewable?
Tip
Text ads using vCPM bids can have a special edge: when they win a placement, they're always given the entire ad space, rather than sharing the space with other text ads. That makes them more likely to be noticed.
Your max viewable CPM bid may win different levels of impressions at different prices than previous max CPM bids. Because you don’t pay for impressions that were not viewable, you may want to increase your max viewable CPM bid to achieve the same level of spend and traffic volume. Learn more about the differences between CPM and vCPM bids
You can set your max viewable CPM bid in a couple of ways. Let's say you sell flowers, and you've set up an ad group with keywords like roses, daisies, and tulips.
- Ad group bids: Set your max viewable CPM at the ad group level, and you'll have the same viewable CPM bid for all keywords and placements in that ad group. Let's say you choose an ad group viewable CPM of US$1.20. If your ad shows on a site that's associated with roses or tulips, or appears on a blog about flowers, the max viewable CPM is always US$1.20. This is the easiest way to manage your viewable CPM bids.
- Placement-level bids: You can set a viewable CPM bid for each placement if you like. If you know a site gets great results for you, you can bid more for placements on that site.
