Navah Hopkins, the Microsoft Ads Liaison, posted on LinkedIn a bit of a refresher on how CPCs work with search ads and Microsoft Advertising. Specifically, why your bid may be over the configured max CPC you set within the platform.
Navah wrote, "I've seen a few questions about Microsoft Advertising bidding (particularly why a bid might be more than you set as a Max CPC)."
She explained that there may be multiple bid adjustments applied to calculate the effective cost per click (eCPC). This is when it may result in your $1 bid costing you $1.44.
She wrote:
To calculate the effective cost per click (eCPC) when multiple bid adjustments are applied, you multiply the base bid by each adjustment factor.
Here’s how it works:Base bid: $1.00
Desktop bid adjustment: +15% → multiplier = 1.15
Audience bid adjustment: +25% → multiplier = 1.25
Final eCPC=1.00×1.15×1.25=$1.4375
So, if both the desktop and audience criteria are met, the click would cost $1.44 (rounded to two decimal places).
"If you use bid adjustments, you need to establish whether you want the base bids to be lower with more aggressive bid adjustments; or higher bids with lower bid adjustments," she added. Navah added, "Microsoft honors bid adjustments, even when using autobidding (Max conversions and Max conversion values)."
Forum discussion at LinkedIn.
