Drew is selling math textbooks and using cost-per-click (CPC) bidding for his campaign. What’s the final cost each time his ad is clicked?
The projected maximum cost-per-click (max. CPC)
The average amount charged each time someone clicks on his ad
The average amount needed to make the ad appear somewhere on the page
The minimum amount needed to maintain a higher rank than the rank held by the next-highest bidder in the auction
Actual CPC is often less than max. CPC because with the AdWords auction, the most you’ll pay is what’s minimally required to hold your ad position and any ad formats shown with your ad, such as sitelinks. Keep in mind that your actual CPC may exceed your max. CPC if, for example, you’ve enabled Enhanced CPC or if you’ve set a bid adjustment.
Actual CPC is often less than max. CPC because with the AdWords auction, the most you’ll pay is what’s minimally required to hold your ad position and any ad formats shown with your ad, such as sitelinks. You pay just enough to beat the Ad Rank of the advertiser with the next highest Ad Rank (or the minimum Ad Rank necessary to appear in that position).
Read more here: https://support.google.com/adwords/answer/2464960
With Manual Cost-Per-Click (CPC) bidding, you can set a maximum price on the cost of someone clicking on your AdWords ads. You can get good value with this bidding method because you pay only when a viewer is interested enough to click your ad and learn more.
Think about billboards: Advertisers pay for billboard space based on how many people might see their ad as they drive by, whether those people actually notice the ad or not.
Internet ads are different: With AdWords CPC bidding, you only pay for Google’s “billboard space” when you know users saw your ad and were motivated enough to click. If 100 people view your ad and three click it, you pay for the 3 clicks, not for the other 97 views.