Everything About Google Ads? How the Google Ads Auction Works
What Is Google Ads
Google AdWords, is Google’s advertising system in which advertisers bid on certain keywords in order for their clickable ads to appear in Google’s search results. Since advertisers have to pay for these clicks, this is how Google makes money from search.
Digital Marketing PostThis info graphic will help you understand how Google Ads works, detailing the Google Ads auction, bidding process and explaining important factors like Quality Score and cost-per-click.
Everything About Google Ads? How the Google Ads Auction Works
Does Google Ads work?
Depending on the competitiveness of the keywords you’re bidding for and the relevancy of that keyword to real conversions for your company, AdWords may or may not work for your business. For the most part, we’ve found that Google AdWords is extremely effective for many kinds of businesses, as long as they don’t waste their money on the wrong keywords, or write weak, low CTR ads.
How does Google Ads bidding work?
The highest ad rank gets the 1st ad position. Your actual CPC will be determined by the ad rank of the next highest ad below you divided by your Quality Score.
The only exception to this rule is when you are the only bidder or the lowest bid in the Google Ads auction; then you pay your maximum bid per click! Ad Words bidding heavily punishes advertisers who bid with low-quality scores. Conversely, those with high-Quality Scores get higher ad ranks and lower CPC.
Each advertiser tells Google the maximum amount they are willing to pay for a click. And then the amount they actually pay will be just enough to beat the next highest bidder – just like the way an eBay auction works.
What is Ad Rank?
The ad with the highest Ad Rank will be shown in the top position of the search results page for a relevant search term. This is followed by the ad with the second highest Ad Rank and so on. Ads that do not meet the Ad Rank eligibility requirements will not be shown on Google.
Ad Rank calculation
Ad Rank = Max CPC Bid x Quality Score plus additional factors like the impact of ad extensions and ad formats, Ad Rank thresholds, search context, and competitiveness of auction.