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!

Maximizing your Google Ads performance

Google ads are one of the most cost efficient ways to promote your business. But, maximizing your Google ads performance, takes a little effort and focus.

What is Google Ads?

Unlike the traditional method of advertising, which is like shouting from a roof top at people around, who may or may not be prospective buyers; it is like broadcasting; not everybody be listening; and not everyone that is listening need be a prospective buyer.

Contrast this with selling in a street full of people who are interested in products like yours; how easy would that be; that is Google ads for you.

How much does Google Ads cost?

Google ads is one of the cheapest way of shouting out at people who are in line with your business, that is, those who want to, who are considering to, or those who would want to in the near future, to buy products or services that are similar to yours.

Since, Google ads is targeted, it is only when people click or watch your ad (in case of Youtube ads) that your account is charged. The advantage of Google ads is that you know where your money went and how effective it was to your purpose.

There is also scope for analysis and refining your ads, change the scope and change your target audience and so on.

This is what we are talking about, when we talk about maximizing Google ads performance. This also effectively and essentially means that we are going to spend a much lesser amount that traditional advertising.

But still, if one isn't careful, we may end up spending far more than what we should have to achieve a target. But first, let us talk about how Google ads finds me business.

How does Google Ads find me business?

As you know, people the world over make use of Google as a search engine to look for their requirements. It may be information, knowledge, product comparison and even for purchase of products and services.

So, it knows what you are looking for, based on your search terms. It also knows who has a certain product that matches your search terms. So, as you type in your search requirement, Google checks its list of service providers and shows an advertisement that is relevant to you.

If you click on the link that is shown, it takes you to the service providers page. If you like it, you make and enquiry. If everything goes well, you make a purchase. It is a win win for everybody.

That is Google ads, in simple terms.

WHY IS IT THAT I AM SPENDING A LOT, BUT AM GETTING LESS LEADS?

There are various factors that contribute to lead acquisition. They are geography, product category and most importantly filtering out abstract and unproductive searches.

When you are just using a set of key phrases without any customization, a lot of people who are looking for something similar, but not your product or service may be seeing your ad. This leads to avoidable and inadvertent clicks, for which you end up paying, but they end up being wasted.

TARGETING GOOGLE ADS FOR A GEOGRAPHY

If you are a local vendor servicing a small community, it becomes essential that you leave away the rest of the world and focus only on your locality.

Google tells you to broaden your search and to widen your search net in order to increase clicks and thereby increase the chances of you getting the right customers. Even though the logic looks good on paper, it might get people who may be interested, but aren't in your locality, are looking for a different product in the same genre, or looking for a specific brand and so on.

So, you need to keep your keywords specific and to the point. Over a period of time, you may refine the list of key phrases, to improve your hits. So, even though you may be getting lesser hits and enquiries, most of them would be relevant and so, the chances of conversions are more.

The positive side of this is that you get to spend lesser, because you have shrinked your net and unrelated clicks are avoided.

The step by step process of reducing Google ad spend, while increasing your chances of getting conversions will be explained in a later episode.