Someone recently asked:
Does Google like FB ads try to optimize your spend? So if it sees my maximum CPC bid does it always bid the max? Or lower based on what the market price is?
In other words, if I put that I’m willing to bid $1.57 (Max CPC) for a click will Google always charge me $1.57 for the click or will it be less some times?
Short answer: pretty often it will be less. How often, or how much less, varies a lot.
This is because the cost of a click is on Google is actually determined at the time of the click and is based on an instant “auction”.
The auction is based partly on competition, but also on the quality of your ad. This is part of what “Quality Score” is about.
The entire system of priority, position and cost is called “Ad Rank” and your cost is actually determined by your Ad Rank (of which CPC bid and competition is only a part).
To learn more about Ad Rank we suggest watching this video put out by Google’s “chief economist” Hal Varian: