Search ads · also called Max CPC, Bid cap
Maximum CPC bid
A maximum CPC bid is the most an advertiser is willing to pay for one click on its ad; the actual price charged is often lower.
When an advertiser sets up a search campaign with manual bidding, it tells the platform the highest price it will accept for a click on each keyword. Google's help describes the bid as the maximum the advertiser is willing to pay, noting that the amount actually paid is often less, because the ad auction charges only what is needed to hold the position.
Today many advertisers do not set these by hand. Automated bid strategies such as Target CPA and Target ROAS compute a bid for every auction from the predicted chance of a conversion. A bid is therefore really a statement of how much the advertiser thinks that particular click is worth.
This is the root of feed economics. A publisher's RPC can never exceed what advertisers bid, and advertisers bid according to results. If clicks from search partner sites convert well, automated bidding values them highly. If they convert badly, bids for those placements fall, or the advertiser leaves through an advertiser opt-out.
Arbitrageurs who run Search-to-search campaigns also set their own maximum bids, which must stay below expected RPV to keep a margin.
An example
Say an advertiser sets a maximum CPC of $3.00. The auction prices the click at $2.10. The search engine keeps its share, and the feed provider and publisher divide the rest under their revenue share.
Related terms
Ad auction
An ad auction is the instant, automated contest run for each search that decides which advertisers' ads appear, in what order and at what price per click.
Ad Rank
Ad Rank is the value Google Ads calculates in every auction to decide whether an ad may show and where it appears relative to other ads.
CPC (cost per click)
CPC is the price paid for one click on an ad; in search arbitrage it is what the arbitrageur pays a traffic source for each visitor.
Bid strategy
A bid strategy is the rule an advertiser gives an ad platform for how much to pay in each auction, from a fixed manual bid to fully automated goals.
Target CPA (tCPA)
Target CPA is an automated bid strategy where the platform sets bids to win as many conversions as possible at an average cost you specify.
RPC (revenue per click)
RPC is the average revenue earned per monetised (paid ad) click: the "sell" price in search arbitrage. Convert it to revenue per visitor (RPV) before comparing it with CPC.