Me and my Auditor

How does google calculate the cost per click for a keyword?

[Force10]

How does google calculate the cost per click for a keyword?

Please read this conversation between me and my auditor

auditor: so google says in the bill this is the click cost for your keyword and you just pay it. how do you know this is the exact click cost.

me: see i set max bid price for every keyword. Based on competitors max bids, past history of my account, CTR, impressions for that keyword etc google will put a cost for that keyword.

auditor: that is a lay explanation

me: Only google can answer you specifically how it is calculated. As long I am charged less than my Max bid, i am paying what is given in the bill

Auditor: I am not satisfied. When you are spending more than million pounds on Google adwords, you have to know, make sure that you are not paying more than what you should.

me: Let me ask Adwords Folks in Web Master World

[oddsod]

Tell your auditor that business has moved on. It's the nature of the beast that we have to trust it to adjust the price based on the market. And we have no reason to believe that Google (or its systems) doesn't do exactly that. 100 years ago, of course, we wouldn't have relied on a computer to calculate how much our ads were worth.

[Force10]

Thanks oodsod. Bump! i need more replies.

[cline]

auditor: so google says in the bill this is the click cost for your keyword and you just pay it. how do you know this is the exact click cost.

A: It's not a click "cost"; it's a click "price". Google sets the price. If that's the price they charge, that's the exact price.

Auditor: I am not satisfied. When you are spending more than million pounds on Google adwords, you have to know, make sure that you are not paying more than what you should.

A: If you want to be satisfied you'll need to audit Google's books, not ours. This is the price Google charges for this ad service. We can take it or leave it. We don't get to negotiate it.

[HitProf]

What cline says. How do you know your printer charges the minimum amount needed? Or your real estate woner? Or your cleaner service? Does he challenge their bills too?

Even if you pay too much per click (easily done if the account isn't managed properly), that's still this is a management question and not an auditor's.

[AdWordsAdvisor]

Another important thing to keep in mind is that one's actual cost per click is not a fixed amount, and literally varies from one click to the next depending on the competitive landscape at the moment of the click. In your stats, you'll see a column for Average CPC, for this reason.

A few other basics:

* Click costs will always be in the range between the minimum CPC of $0.05 (or currency equivalent), and the Maximum CPC set by the advertiser for the Ad Group (this is the default) or individual keyword (if the advertisers has set it up this way - which trumps the default).

* Actual click cost varies with CTR. A really high CTR can allow one's ad to appear in a higher potion for a lower cost per click.

AWA

[Dr_X]

A really high CTR can allow one's ad to appear in a higher potion for a lower cost per click.

Can you define "really high"?

-Dr.X

[Force10]

Thanks Adwords folks.

[mack]

You could always reply with

"so whats the cheapest I can pay for an auditor?"

The importaint point to get across is it's a bid system, no fixed value etc.

Mack.