Google AdWords Learning Center - Pricing and Ranking

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Lessons Catalog

Lesson 3b: Placement Targeting

Introduction

• What is Placement Targeting?

• Why Use Placement Targeting?

• Appearance and Location

• Quiz

Starting a Campaign with Placements

• Campaign Creation

• Choosing Placements

• Quiz

Pricing and Ranking

• CPM Pricing

• Ranking

• Quiz

Objective: Understand how cost-per-thousand-impressions (CPM) pricing works and how CPM ads compete with CPC ads.

The content network lets you bid for ad space in either of two ways: with the classic cost-per-click (CPC) pricing, or with cost-per-thousand impressions (CPM) pricing.

With CPM pricing, you set the maximum price you're willing to pay for every 1000 impressions, or views, your ad receives on a given site. This means that you're charged whenever your ad appears, whether a user clicks it or not.

As it does with keyword-targeted ads on the search network, AdWords automatically lowers the actual CPM to the minimum price needed to win the auction in a given position on the content network. In many cases, advertisers pay a price lower than their CPM bid.

CPM pricing can be used with keywords or with placements. CPM pricing is available only for campaigns that target the content network. It can't be used in campaigns that target the search network.

When an ad with CPC pricing and an ad with CPM pricing enter the same auction, AdWords uses a system of effective CPM, or eCPM, to compare and rank the ads.

For ads with CPC bidding, the AdWords system considers the ad's bid, clickthrough rate (CTR), and other relevance factors, all taken across 1000 impressions. The resulting figure is the ad's eCPM, or effective cost per thousand impressions.

For any available ad position, the eCPMs of ads with CPC pricing are compared to each other and to the bids of any eligible ads with CPM bidding. The highest-ranking ad wins the position and is displayed to the user. An image ad must outrank the eCPM of the top four keyword-targeted text ads in order to win the space.

No matter which type of ad wins the position, the AdWords Discounter monitors the competition and ensures that the winning ad is charged only what is necessary to maintain its ranking above the next highest ad.

To learn more about the AdWords Discounter, visit the Cost Control lesson.