Search & social · also called keyword auction
Keyword bidding
Keyword bidding is choosing search terms your ads should appear for and setting how much you are willing to pay per click when someone searches for them.
In search advertising, keywords are the triggers. An advertiser selects words and phrases (for example "cheap flights to Tokyo"), sets a maximum CPC or lets the platform bid automatically, and chooses match types that control how closely a search must match: exact, phrase or broad match, plus negative keywords that exclude unwanted searches.
When someone searches, the platform runs an auction among advertisers whose keywords match. On Google, ad position depends on Ad Rank, which combines the bid with ad quality (Quality Score factors), expected impact of ad extensions and context. The price paid is generally the minimum needed to hold that position, a legacy of second-price auction thinking.
Keyword bidding has become more automated: broad match plus "smart bidding" strategies (target CPA or target ROAS) now do much of the work, and campaigns such as Performance Max go beyond keywords entirely. Competitive keywords such as insurance or legal services can cost tens of dollars per click, which also makes them targets for click fraud.
Think of it like this
Keyword bidding is like bidding for a stall at the entrance of the aisle where shoppers ask for a specific product.
An example
An insurer bids US$25 max CPC on "car insurance quote". Its Quality Score is high, so it wins position one while paying US$18.40 per click on average.
Related terms
Search advertising
Search advertising is placing paid ads alongside search engine results, triggered by the words people search for and usually charged per click.
Quality Score
Quality Score is Google Ads' 1-to-10 diagnostic rating of how relevant and useful a keyword's ads and landing page are, based on expected click-through rate, ad relevance and landing page experience.
CPC (cost per click)
CPC (cost per click) is a pricing model where the advertiser pays only when someone clicks the ad, and also the average amount paid per click.
Second-price auction
A second-price auction is one in which the highest bidder wins but pays just above the second-highest bid (or the floor), which was the original standard in real-time bidding.
Click fraud
Click fraud is generating fake or worthless clicks on pay-per-click ads, by bots, paid people or malware, to drain an advertiser's budget or inflate a publisher's earnings.