You can set your bids at keyword or ad group level and if you do not specify a maximum CPC bid for your keywords your ad group maximum CPC (Cost per click) will automatically apply.
Your bid also plays a role in your Ad rank. Increasing your maximum CPC (Cost per click) bid while maintaining a high Quality Score can improve the overall position of your ad on Google.
The bidding strategy you choose would depend on your advertising goals. If you are more concerned about getting clicks to your website you should choose cost per click (CPC) bidding where you pay only when someone clicks on your ad.
You also have a choice between manual and automatic CPC bidding.
If you’re new to Google AdWords you might consider automatic bidding where you set a daily budget and the AdWords system gets you as many clicks as possible within that budget.
Once you get the hang of how AdWords works you can always switch to manual bidding which will allow you to have more control over your maximum CPC bids.
However, if you are focused on building your brand on Google’s content network, then you should choose cost per thousand impressions (CPM) bidding. With this option you will pay for impressions on your ad, and pay for every thousand times your ad shows.
No matter which option you choose, it’s best to consult a Google AdWords Qualified Professional if you’re not sure. They are qualified on Google’s system and will help you get the most out of your budget.