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Auto-Discounting, Cost Per Click, Ranking, and Position

Click-Ads™ uses metrics similar to other click-through advertising networks to determine ad ranking, position, and cost-per-click (CPC). You select a maximum cost-per-click (MAXCPC) that you're willing to pay, but your actual cost-per-click (CPC) will be auto-discounted to the minimum you would need to pay to maintain your POSITION over your next lowest competitor. This is similar to Proxy Bidding on eBay.

Auto-discounting achieves the highest position for you at the lowest cost to you. A simple example illustrates:

Assume we have only two advertisers A and B with equal CTR, and advertiser A bid a MAXCPC of 20 cents and B bid a MAXCPC of 40 cents. B's actual CPC would be lowered to 21 cents since this is all that is needed to out-bid A.

If ad popularity (CTR) are different, however, CPC may be affected. Better performance will lower your CPC while weaker performance can raise your CPC. CPC calculation follows.

DEFINITIONS

RANK

Your RANK (quality of placement) is determined by your MAXCPC times ad popularity (CTR). Higher RANK means more exposure.

RANK = MAXCPC x CTR

POSITION is simply the numerical ordering of RANK. Example:

Two items to notice:

• Even though ad A has a lower interest (CTR) than C, it is ranked higher, first among all ads in fact, because of the higher MAXCTR.
• As a result of ad C's greater interest (higher CTR) than B, it ranks higher than B even at a lower MAXCPC.

New ads are assigned a median CTR for a few hours until a trend is established. Since your ad's interest (CTR) can change over time, so can your RANK. Click-Ads recalculates your RANK many times per day.

Summary: To improve your RANK:

• Increase your MAXCPC. (Please stay within your comfort zone!)
• Experiment to try and improve your ad wording to increase interest - your CTR. We've seen advertisers change their ad headline and wording and increase interest 50%!

CPC and Auto-Discounting

Your actual cost-per-click (CPC) is determined from your relative RANK. Your CPC is the lowest amount you need to pay to maintain your RANK:

CPC = FLOOR(RANK_OF_NEXT_LOWER_POSITION / YOUR_CTR) + 1

but not less than a channel's minimum CPC.

This is similar to eBay's Proxy Bidding, in that you will outbid your competitor at the lowest possible amount.

Here's an example using the same ads above and assuming a channel minimum CPC of 20:

Notice how each CPC is auto-discounted to the minimum needed to maintain its POSITION over its next competitor.

Calculations on this page are subject to change as we may include ad relevancy or other refinements in the future.