PPC Glossary Terms: Bid Price

When establishing a PPC campaign, the advertiser is required to set their maximum bid price for each individual campaign. This can be done according to a preconceived value per visitor or it can be done so that your ad is guaranteed to reach a certain position within the sponsored advertisement listings on search pages. Both methods have their merits and different PPC managers will usually employ one or the other technique to determine the bid price.

When you set a maximum bid price you won't necessarily have to pay this amount for every click. If your PPC maximum bid price is high enough to gain you the top spot in the results then you will only have to pay the amount that would be required to ensure you got that position. The same is true for second, third, fourth position and so on. Other PPC campaign factors, including the click through rate of your ad and the relevance of both your ad copy and landing page copy will also help determine the actual bid price you need to pay.

Bid price is one of the most important aspects of a PPC campaign that you should constantly monitor, especially if you choose to bid automatically to gain a certain position. Other campaign's bid prices can vary dramatically and they can do so quickly. If a bidding war starts and you get caught in the middle of it, it's conceivable that your maximum bid price could suddenly shoot through the roof before you have chance to do anything about it.

Please see PPC Bid Management for more information.