515 E Las Olas Blvd., Ste. 120,
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515 E Las Olas Blvd., Ste. 120,
Fort Lauderdale, FL 33301

How Does Google Ads Work?

One thing that you’ll find in the majority of Google search result pages is Google Ads. What more, you’ll always notice these ads at the top of the search engine results page. Google Ads are one of the best ways of driving relevant traffic to a website. They’re paid for by the businesses that want people to find the services or products that they offer.

Google Ads is an indispensable tool for businesses today. However, one can only reap the maximum benefits if they understand how Google Ads works. If you’re planning to invest in Google Ads, we suggest you first go through this detailed account of how Google Ads work.

Understanding Google Ads

As mentioned earlier, Google ads are a form of paid advertisement by Google that appear at the top of the search results when a user searches for specific keywords on Google. The results on the Google search engine results page (SERP) that are a result of Google Ads have a green-colored ‘Ad’ label beside the web address. The results that appear below these sponsored results are the actual organic search results.

Google Ads are categorized into two different networks, allowing you to pick the option that best fits your advertisement goals. These include the search network and display network. The search network focuses on actual search results, whereas the display network isn’t text-based, and is often displayed on partner sites like YouTube, Gmail, etc.

How Does Google Ads Work?

Now that you’ve got a basic understanding of what Google Ads are, it’s a good time to move on to how they really work. If you’ve ever come across sponsored search results, you may have noticed that they appear in an orderly fashion, just like organic results. Now the question is – what makes an ad appear on the top spot and which ads appear lower down the list?

Google Ads work through an auction system. Now, you may assume that the individual with the highest bid secures the top spot, but that’s not how Google Ads works. Your bid value isn’t as important as your website quality score.

Ad Rank

Once the advertiser decides which keyword they want to bid on, they start placing bids for it. After this, Google considers two factors before deciding which advertiser gets the top spot – their maximum bid (CPC) and quality score. The CPC bid is the highest amount that an advertiser is willing to pay for a specific keyword. The quality score is a metric that depends on how useful and relevant your ad is to the user’s search query. The better your quality score, the greater advantage you’ll get.

So, your ad rank is calculated as follows: CPC bid x Quality score

If you’re bidding a lower amount but your quality score is high, your chances of winning the auction are increased. However, if your quality score is low, no matter how high you bid, you might not be able to make the mark.

Ad Cost

Once Google decides the ad rank of each advertiser, the next step determines how much an advertiser is required to pay. The bid is just the amount an advertiser is willing to pay, not the amount they have to pay. That amount is calculated by Google itself.

Google uses the following formula to calculate the actual amount an advertiser has to pay to get their ad displayed on Google: Ad rank of the advertiser below you/ Your quality score + $0.01

Google is quite smart. It has to ensure that the people using their platform get the most relevant search results only, which is why they consider the quality score of a website and the CPC bid. It shows how significant the website’s relevance and quality is for its ad to appear on the top rank. For Google, it’s quality over anything else!

Closing Word

Investing in Google Ads is definitely worth it, especially if your website has a good quality score. Sometimes, SEO doesn’t hit the jackpot alone, and that is when Google Ads comes into play. With adequate knowledge about the mechanism of how Google Ads works, you can step into the auction with a lot more confidence!