How do google calculate the price per click ?

5 replies
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What are the criteria for calculating the price per click on Google?
thx
#calculate #click #google #price
  • Profile picture of the author jamaks
    Hi, for my understanding it pretty much comes down to an auction, with a twist. The price is governed by how much competing adwords clients are prepared to bid on a particular keyword or phrase. The top bidder would be placed top of adwords on a search page with slightly decreasing bids taking the remaining ad units. The twist is that a prefered client can actualy get the same ad position as a standard client but at a lower price per click. Of course the CPC the adwords user is paying is significantly higher than that a publisher could expect to be paid. Jim
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  • Profile picture of the author BAC
    google keeps 33% of revenue for every clicks and gives 67% to publisher (which one is highest), cpc based on bids of advertisers which fluctates daily.
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  • Profile picture of the author MaryPabelate
    Banned
    The question is how Google decide the cost of a click?

    And it is on the bidding system.
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  • Profile picture of the author RayW
    They don't. Advertisers decide the price by bidding.
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  • Profile picture of the author Lucid
    The advertisers do individually decide how much they are bidding (maximum CPC) and this affects the whole auction. What one pays for the click is based on Quality Scores and bids of each advertiser. The basic formula published is:

    CPC = QS(b) x bid(b) / QS(a)

    where (b) is the advertiser ranked below you and (a) is you. A simple example:

    You: QS = 7, bid = $0.30
    Competitor: QS = 7, bid = $0.25

    Your CPC would therefore be .25 * 7 / 7 which comes to $0.25. If your QS was 6, you'd pay $0.29. If it was 10, you'd pay $0.18.

    It all depends on the situation at the time. That is, who the competitor is, their QS and their bid as well as your QS.
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