Is it true that we have to set a CPC bid limit when we’re using automatic bidding?

The above question will be answered in the following paragraphs.

With automatic bidding, the Search Engine Marketing systems (like: Adwords, Adcenter & Search Marketing) adjust the bids automatically to earn the most clicks possible within the given budget. It isn’t possible to set a specific CPC bid. However, we can set an upper limit on the CPC bids for the entire campaign. This is the CPC bid limit. Specify a bid limit and the Search Engine Marketing system will never bid over the specified limit for any single click.

If it’s important for us to control the cost of individual clicks on our ad, it’s good to specify a CPC bid limit. Say if we sell a product that costs $5.00, we may wish to set a CPC bid limit of $5.00 maximum, so we never pay more than the maximum limit for a click.

By setting a limit we have more control over our costs, but we also may restrict the ad position or the number of click the ads receive. If we choose not to set a click price limit, automatic bidding will function the same way as it normally does, choosing whatever maximum CPC bids it determines will earn the most clicks possible within the set budget.

If a lot more control is required from our end on a day-to-day basis, manual bidding for clicks will be the best advised process to go for. Nevertheless for long campaigns & low budgets, Auto bidding is very useful.

Here are 3 key points which will help us understand the working of Automatic Bidding

• When you place a bid, you enter the maximum amount you’re willing to pay for the item. The seller and other bidders don’t know your maximum bid.

• We’ll place bids using the automatic bid increment amount, which is based on the current high bid. We’ll bid only if it’s necessary to make sure that we remain the high bidder, or to meet the reserve price, up to our maximum amount.

• If another bidder places the same maximum bid or higher, we’ll place another bid. Our maximum bid is kept confidential until it is exceeded by another bidder.

Contributed by Leo V J

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