Keywords also help determine how much you pay. Each of your keywords has a CPC bid amount. These bids specify the maximum amount you’re willing to pay each time someone clicks your ad. This is called the maximum cost-per-click (max. CPC). However, you might not need to pay the full max. CPC amount for each click.
An auction is run every time a customer searches, which determines which ads show for this search and in what order. The AdWords system evaluates your keyword for each auction and calculates its Quality Score. The Quality Score is based on the recent performance of the keyword and your ad, how relevant the two are to the search term, and other factors. The higher the score, the lower the bid requirement.
If you’re just beginning to use AdWords, you might want to use automatic bidding. With this type of bidding, you set a target 30-day budget, and AdWords sets your bids for you, aiming to bring you the most clicks possible within that budget. If you want more control over your keyword bids, choose manual bidding so you can set each bid yourself.
When setting your maximum CPC bids, consider the value of a click. How much is it worth to you to have someone visit your website? If it’s worth a lot, then you might want to set a higher bid. In general, a higher CPC bid can allow your ad to show at a higher position on the page.