How do cost-per-click (CPC) ads compete with cost-per-thousand impressions (CPM) ads on the Google Display Network?

 

• CPC bids are effectively converted to CPM bids
• CPM bids are effectively converted to CPC bids
• Ads using CPC bids are not allowed to compete on the Display Network
• CPC and CPM bids only compete against bids of the same type

Correct answer is:

• CPM bids are effectively converted to CPC bids

Explanation: To keep things fair, when CPC and vCPM ads compete for the same Display Network placement, the two types of ads are compared apples-to-apples on how much they’re effectively willing to pay for the impression. With a vCPM ad, the max viewable CPM bid represents how much the advertiser is willing to pay for each 1,000 viewable impressions; with a CPC ad, Google estimates how many clicks the ad might receive in 1,000 impressions to get the comparison.