When using Google AdWords to advertise online the advertiser selects a highly relevant phase or keywords and bids a certain amount on those keywords.
Google provides a Keyword Traffic Estimator to help the advertiser select a budget amount which establishes a daily limit. You then bid on the keywords. The bid is for the CPC, cost per click, per impressions or acquisitions. You do not need to worry that you might be way over your competitors' bids because when you bid an amount that is higher than all other bids you might not have to pay the full amount of the bid. Google only charges you one cent above highest competitor's bid.
Start small. If you're a beginner, try a daily budget of US$10 to US$50. Check your account soon after applying a new budget to see how your campaigns have performed.
Types of Payment Programs
The advertiser can select from a variety of different types of payment programs on which to bid:
CPA – Cost per Acquisition: The amount the advertiser is willing to pay for a complete conversion.
Conversion: The user completes the desired transaction after clicking on the ad (for example buys the product or service being advertised)
CPC – Cost per Click:The amount the user actually pays each time a user clicks on their advertisement.
CPM – Cost per Thousand Impressions:The amount a user is charge for the ad being displayed. The user bids on blocks of 1000 views.
CPV - Cost per View:
For Videos. The advertiser is only charged when a user watches the video.
With manual bidding you set CPC, Cost per Click level for your keywords and make adjustments according to the results. If you are willing to take the time you will probably get the most out of this option, but you will need to keep changing the CPC until you get the desired results, this must be done manually there is not automation for this option.
Automatic bidding is based on your daily budget and CPC, Cost per Click and bid limit. This will get you the maximum amount of clicks based on your daily budget.