Because it’s possible that you’re being charged $1 every time your ad is shown, your advertising
budget could be inflated to a sizable bill within 24 hours if your ad were shown every time the keyword
you’re bidding on was shown. So to keep the advertising budget manageable, you can put a
cap on your budget for each keyword.
If your budget for that keyword is $25 a month, and the word stays at the $1 level (it can drop below
that at any time, depending on what your competition’s highest bid is), your ad can be shown 25 times
a month. But the price of words (or the ads in which they appear) is dynamic, going up and down as
other ad owners increase or decrease their bids. If the price drops below $1, this increases the number
of times your ad can be shown, and any amount over that $1 bid decreases the times it will be shown.
We’ll get into this in a little more detail as we discuss bid management and such practices as bid
jamming.
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