AdSense is best known as a Cost Per Click network, but any publisher who has ventured into the bid types report will know that advertisers aren’t all paying per click. Understanding bid types is crucial to making informed layout decisions, so here is our quick guide to the bid types you will find in Google AdSense.
CPC bids – Cost Per Click
CPC bids make up the bulk of impressions on Google AdSense and are what AdWords/AdSense are best known for as this mimics the model used to advertise on Google itself. With a CPC bid the advertiser only pay for ads that are clicked on. CPC is often preferred by smaller advertisers and those with a “bottom of funnel focus” who want precise reporting on the impact of their ad spend.
CPM bids – Cost Per Mille or Cost Per Thousand
A CPM bid is the amount that the advertiser will pay for their ad to be shown 1000 times (‘Mille’ being French for thousand). CPM bids on placements that are above the fold and more likely to be seen will tend to be higher. CPM buying is the most common in online advertising. Paying per impression is the most similar model to traditional media where prices are governed by viewers/readership. It might not be surprising then that CPM bidding is popular with brand advertisers who are more interested in generating awareness than securing the final sale.
Active View CPM bids – or CPMAV bids
As CPM bids are paid by ads displayed, advertisers are often paying for the display of advertising that is never seen. Active View is Google’s measurement of which impression are actually viewed. Bids of this type are the price the advertiser will pay for 1,000 viewable impressions. An impression is deemed to be viewable when at least half of the ad is on-screen for at least one second. If the impression doesn’t meet that criteria then the advertiser doesn’t pay.
When Active View CPM bids first appeared in the AdSense dashboard these were simply labelled as CPMAV bids. The label could be set to change again soon as all CPM bids will soon be for Active View impressions only.
CPE bids – Cost Per Engagement
Cost Per Engagement ads are less common in AdSense, but do appear to be increasing. As a bid type CPE is closest to CPC in that the advertiser is not paying for the ad to be shown, but for it to be interacted with by hovering over to either expand the ad or play a video. If there is no engagement the advertiser doesn’t pay, but the user doesn’t have to click the ad and leave the publishers website.
If you are checking the bid types report (undre advanced reports) you might also see a number of impressions listed at Unbillable. These impression numbers can sometimes be very significant, so seeing high numbers with no revenue associated can be a shock.
Unbillable impressions refer to units such as link units where there is an impression element that doesn’t generate revenue. Link units can be very effective, but revenue isn’t generated as soon as a user clicks. When the link unit is clicked a page with ads appears. Revenue is then only generated when those ads are clicked. This extra step creates the unbillable impressions.
Which bid type is best?
If you haven’t read up on bid types before you might be surprised at the number of ways that there are to not get paid for an ad impression. Active View bids into units below the fold and ignored CPC or CPE ads will eat into your ad impressions without generating a penny in revenue. It’s not surprising that many publishers believe that CPM ads are the best solution.
At the heart of Google’s ad system is a mechanism that enables all bid types to compete: The ad auction. The auction is determined not just by the total bid, but by the likelihood of that ad actually generating money (through a mechanism called quality score). This means that a High CPC ad that is unlikely to be clicked on your site won’t win over a lower paying ad that would earn more as a result of being clicked more frequently.
The end result is a system that allows advertisers utilising different bid types to compete in a near instant auction designed to secure the highest fair bid.