All other things being equal, if you've set a maximum cost–per

All other things being equal, if you’ve set a maximum cost–per–click (max. CPC) bid of USD $1 for your ads, and if the next most competitive bid is USD $0.50 for the same ad position, what is the actual amount you’d pay for that click?

Question | Explanation | Answer

AdWords Fundamentals Certification

All other things being equal, if you've set a maximum cost–per–click (max. CPC) bid of USD $1 for your ads, and if the next most competitive bid is USD $0.50 for the same ad position, what is the actual amount you'd pay for that click? question

Explanation.

Setting your bids it’s important to understand that your bid and actual cost-per-click you pay are two different things. Your actual cost-per-click (actual CPC) is the final amount you’re charged for a click. It’s usual lower and sometimes significantly lower than your bid.

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.

In this case, the next highest bid is $0.50 for the same ad position. So, the minimum required amount to hold your ad position is $0.51.

Note that sometimes depending on your bidding startegy (ECPC for example) the amount you are charged per click could be even higher than you max CPC bid.