Each advertiser on Google Adwords sets their spending limits, dependent on their advertising goals.
The daily budget (previously explored in my ‘Budget Wisely!’ blog post) runs from midnight until midnight per day, and can be set as high, or as low, as the advertiser chooses.
Once the daily budget has been decided, and implemented, the model of charge, either the Cost per Click (CPC) or the Cost per 1000 Impressions (CPM), must be selected.
The Cost per Click can be described as the amount an advertiser is willing to pay for a click on your ad when the ad appears on Google, or other partner sites. This method is available on the search and content networks.
The Cost per 1000 Impressions refers to the amount an advertiser is willing to spend each 1000 times your advert makes an impression from a search query. This means that you pay when your ad is shown, and not when your ad is clicked on, like the CPC model. It must be noted that CPM bidding is available for campaigns that only target the content network.
It is important that the advertiser chooses the right bid option that will lead to the greater amount of conversions.