Actual Google ad placement within the Google Search Engine is determined by a combination of three overall considerations.
First, is the maximum bid per click amount set by the advertiser on a relevant keyword – so a $ 4 bid on a keyword or keyword phrase used within a user query with all other things being equal, will be the ad seen by the user of the Google information searcher if other bid maximums are of lessor amounts. The "Click Through Rate" or CTR formulas, built by Google after looking at the performance histories of millions of keyword clicks over time plays a big part in determining Keyword relevance and bid amounts and your landing page's "Quality Score" in relation to this so I discuss Quality Score next.
The Quality Score – which is comprised of several things. Google wants to show users relevant, quality content so they have built a weighting factor called the "Quality Score" that ultimately is multiplied against the maximum bid amount set by the advertiser for a particular keyword or phrase to determine what is called ad rank. The ad rank ultimately defines what position your ad will be shown in user query search results – or if it will get shown at all.
The first aspect of Quality score is that of relevant, original content. What will the user see when taken to the website landing page for the advertisement? Does the content displayed answer the question or provide the information posed by the query made by the user? Google determines this by looking at the content for this page so this is where webpage optimization and registering them within the Google search engine comes in handy. Next, as a weighting factor, Google looks at the webpage performance. How fast does the page load? Are there few or no pop-ups or pop-unders attached to the page?
Is the page mobile responsive – will it present well on mobile phones, tablets, etc. Is the landing page "transparent" to the user making the query – that is to say, does it reflect what your website is about in general – is this a good website to send the user to for this type of user query? And lastly, what is the ad format? By this Google is looking to see if any qualifying "ad extensions" are being used by the advertiser to give the user more information about your site and landing page before he or she gets there? Things like phone number, hours of business, other landing page options within the ad for more specific information to go to.
Advertisers can test their ads prior to final submission and even while they are running to view how their ads will or are performing and there are things that can be done at any time to influence where and when ads are being made viewable. You can always work to improve your Quality Score by doing such things as implementing ad extensions, introducing negative keywords, changing ad verbiage or images, increasing or decreasing your maximum bids on keywords and keyword phrases, changing running times or audiences for the ad, etc . Staying in touch with your ad's performance as it is running and making adjustments to improve how it is converting is always a good idea and knowledgeable advertisers do this regularly to make their ads more effective and to save advertising costs on their ads.
As for what your ads are costing you per click, every ad you place goes into what is called an "Ad Auction" where you are competing against other advertisers for ad placement locations and times. Each auction run is called a "Second Price Auction" so the good news as to what this means is that you do not necessarily pay your maximum bid amount for each click of your ad. You pay just enough to beat the second-place advertiser's bid and keep your position. So, this means that if your maximum bid is $ 3 and your 2nd place competitor's bid price is $ 2.00, you get the position in the search results and pay the $ 2.00 for the click instead of $ 3.
As a pro tip to this concept, when you are using the Keyword Planner and are looking up the keywords you want to use and see the suggested bids to get on page one and position one, if there is high competition for a word or phrase, you will know that the second maximum bid price will be close behind whereas as low competition means that there might be quite a gap in bid price between advertisers and you may get a good price break per click to get the position that you want. Also remember as you check these out that Quality Scores play a big part in how your advertisement is actually viewed in relation to other advertiser bids and can save you even more money per click if you are doing the work to improve your quality scores and ultimately, your ad rankings.
Be sure to take your usage of the Keyword Planner all the way through to the performance forecasting component of the tool when working out your keywords and bids as it can show you some good models of what your advertising costs will be as you work different aspects of your bid values and keyword phrase selections. Tweak it here first before going live as this will save you advertising costs.