Demystifying
Google Ads:
Part 2
How Google Ads
Auctions Work
Welcome back, aspiring Google Ads expert! In part 1, we explored the different online advertising models
(PPC, CPM, etc.) used in Google Ads. Now, let's peel back another layer and
delve into the exciting world of Google Ads auctions – the core mechanism that
decides which ads appear when people search online.
Let's consider your bakery, which is famous in your locality for the melt-in-your-mouth chocolate chip cookies. You want everyone to know about your delicious
treats, but instead of relying on word-of-mouth alone, you decide to advertise
in the local newspaper. Here's where Google Ads auctions come in.
The Bidding Frenzy: How Ads Vie for
Attention
Imagine yourselves walking down a busy street downtown. The street is dotted with stores on the sides. Each of these stores have a nameboard and some of them will have interesting lights and other fancy aspects to capture your attention. You are walking down the street with an intention to buy a product. If you see a store that displays the product in your mind prominently, you consider, and then walk in.
Similarly, think of a Google Ads auction like an auction for
displaying your ad on a search engine results page (SERP). Whenever someone
enters a search term, like "freshly baked cookies," Google conducts a
real-time auction among advertisers targeting relevant keywords. Several
factors determine which ad wins the auction and gets displayed in a prime
position:
- Your Bid: This is
the maximum amount you're willing to pay each time someone clicks on your
ad. It's like setting your spending limit at a physical auction. In our
bakery example, you might set a bid of $1, meaning you're willing to pay a
maximum of $1 whenever someone clicks on your ad after searching for
"freshly baked cookies."
- Ad Rank: This
score combines your bid with other factors like the quality and relevance
of your ad and landing page. Going back to the bakery example, even if a
competitor bids higher than your $1, your ad could still win the auction
if your ad and landing page are highly relevant to the search term
"freshly baked cookies" and have a strong Ad Rank. Google
rewards relevant ads because they provide a better user experience.
- Ad Extensions:
These are additional snippets of information you can add to your ad, like
your phone number, address, or special promotions. Imagine including a
call extension with your bakery ad, allowing users to call you directly
from the search result page. This can give you an edge over competitors
who haven't included extensions.
The Auction Outcome: Who Wins and Why?
The advertiser with the highest combined Ad Rank
(considering factors like bid and ad quality) typically wins the auction and
gets their ad displayed in the most prominent position on the SERP. But here's
the good news: you don't necessarily need the highest bid to win. By crafting
highly relevant and high-quality ads, you can outrank competitors even with a
lower bid.
Beyond the First Place: The Bidding
Waterfall
Google Ads auctions aren't just about who gets the top
spot. There are multiple ad positions available on a SERP, and the auction
determines which ads appear in each position. The cost you pay per click (CPC)
can also vary depending on your ad rank and the competition for that specific
keyword.
Let's revisit the bakery example. Imagine two other
bakeries are also bidding on the keyword "freshly baked cookies." You
might win the auction for the top spot with your $1 bid if your ad and landing
page are exceptional. However, the other bakeries might still appear below your
ad if their Ad Rank is high enough, even though their bids might be lower than
yours.
A Win-Win for Advertisers and Users
This auction system benefits both advertisers and users:
- Advertisers: You only
pay when someone clicks on your ad (PPC model), making it a cost-effective
way to reach potential customers actively searching for what you offer
(freshly baked cookies!). You can also set daily or campaign budgets to
control your spending.
- Users: They see
ads relevant to their searches and don't incur any cost unless they click
on an ad. Google prioritizes relevant and high-quality ads, ensuring a
positive user experience.
In Conclusion
Understanding Google Ads auctions is fundamental to your
success in this dynamic advertising platform. Remember, it's not just about
throwing the highest bid; it's about crafting compelling and relevant ads that
resonate with your target audience. By focusing on quality, relevance, and
strategic bidding, you can win the auction and get your ads in front of the
right people at the right time.
As we progress, we'll delve deeper into crafting high-performing ads,
keyword research strategies, and campaign optimization techniques to help you
become a Google Ads whiz!