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How Google Ads Auctions Work

Updated: Mar 4

Navigating the world of Google Ads can seem quite daunting, especially if you're new to online advertising. One key thing to know for success of any Google Ad is how the Google Ads Auction works.

Today, we'd like to help you break down this concept, offering a clear and simplified explanation to help you grasp its significance and how it can boost your advertising efforts.

Let's Start With the Basics...

Google Ads Auction Time!

How does Google Ads Auction Work? - Created by Ennko Ltd

So let's start with the definition of an auction -

a public sale in which goods or products are sold to the highest bidder

All we're doing here is replacing the goods / services with spotlight in the advertising space. Every search on Google triggers an auction for ads related to that search. This auction decides which ads are shown and their order. In this instance, Google Ads acts as the auctioneer, carefully evaluating each bid to determine who earns the spotlight on the search results page for the keywords you're after.

Anytime you bid on a keyword, you're essentially saying "Hey, I'm willing to pay this much if someone clicks on my ad."  That amount you're willing to pay is your bid. It's like raising your hand at an auction with your best offer to grab the auctioneer's attention. Importantly, you only pay when someone clicks on your ad. It’s a cost-effective approach, ensuring you pay only for actual results, not just visibility.

Now the important thing to note is the auction winner isn't just about who bids the most money. Yes higher bids do help with ranking higher but it's not the whole story. At times, even if you're not the highest bidder, you can still win a better spot with a high-quality ad matching what people are searching for. Google prioritizes delivering ads that are not only relevant but also of superior quality to its users.

To achieve this, the system evaluates several key factors, not in order but as a whole -

  • Your bid amount

  • Quality score of your ad

  • Context of the user’s search query

Additionally, the influence of ad extensions and formats also plays a significant role, though that's a topic for another discussion. For this article, we'll focus on the key area you have more control over, the Quality Score of your ad.

What is Quality Score?

Quality Score is essentially a combined rating of your ads, keywords and landing pages. These factors work together to determine where you rank on the search results. The calculation begins with the relevance of your keyword to the searcher's query. For example, let's imagine you run a pet grooming business for only dogs. You then choose to bid on a keyword 'pet grooming service'. While this may attract dog owners, it's not as targeted for cat or guinea pig owners, diluting its relevance. Opting for a more precise keyword, such as 'dog grooming service', enhances relevance and by extension your Quality Score.

Secondly, the ad has to be relevant to the context of the user's search query. Using our pet grooming example, if you're bidding on the keyword "pet grooming service", then the ad has to relate to this keyword. A good example of an ad would be -

Headline: Premier Pet Grooming Services
Description: Transform your pet’s grooming day into a luxurious spa experience.

It's vital that your ad clearly states it's for pet grooming to avoid confusion. For example, an ad titled 'Premier Groom Services' with a description of 'Get a luxurious spa experience' might make someone think it's for people, not pets. This mistake could stop potential customers from clicking on your ad. Remember, being clear and relevant is key.

Lastly, it's important that your landing page matches what the user is searching for. For example, if someone clicks on an ad for dog grooming but finds information about guinea pigs instead, they'll probably leave the page quickly. Google notices when this happens and it can lower your ad's position. It's crucial that the landing page accurately mirrors the ad's keywords and description to ensure consistency and relevance.

Tips for Success

So as we've highlighted, winning in the Google Ads Auction isn't just about having the most money. Various factors come together in Google's decision making process to grant people different positions in the rankings.

That said, here are some summarised tips for success -

  1. Choose the Right Keywords: Select keywords carefully to match what your potential customers are searching for.

  2. Improve Your Ad Quality: Ensure your ads are relevant to your keywords and lead to a landing page that delivers on what your ad promises.

  3. Target Smartly: Make sure your ads are shown to the right people at the right time by using targeting options effectively.

  4. Optimize Continuously: The digital marketing landscape is always changing. Regularly review and adjust your campaigns to improve performance.

Remember, success isn't just about how much you spend. With a bit of practice and ongoing optimization, you can maximize your visibility and reach the customers who matter most to your business. Happy advertising!

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