How Does Google Ads Work?
Google Ads can feel like a bit of a black box where you put money in and hope for some magic to happen. It is a common misconception that only advertisers with a large budget get all the clicks and conversions while smaller advertisers don’t have a chance. While a certain minimum budget is required, there are multiple other factors that determine whether your ad shows up or now. The good news: you can control most of them!
So let’s break it down and try to understand why your ad appears in some cases but not in others and how the entire Google Ads system works.
First of all, it is important to understand that Google Ads is built around three core principles: relevance, control and results.
Relevance means that users should only see results that are relevant to their search query and provide them with the information they were looking for. An ineffective search engine wouldn’t be able to retain users for long as they would move on to other providers that get them better results.
Control means that you have 100% control over your campaigns and budget and won’t see any surprises on your invoice.
Results mean that you can track the performance of your campaigns and identify clearly what works and what doesn’t. Unlike the old-fashioned billboard or newspaper ad that leaves you with question marks around effectiveness, Google Ads has sophisticated measuring and reporting tools to evaluate performance.
So how does the Google Ads system work?
Google Ads works on an auction-based system, meaning that multiple advertisers compete for available ad slots. This happens in real-time every time a search is done on Google and an ad space becomes available. The same principle applies to other Google Ads campaign types like Display, Video, App and Shopping but for the sake of simplicity, we refer to Search only in this article.
Search campaigns use keywords that can trigger ads. If a user types in a search query that closely matches one of your campaigns’ keywords, your ad enters the auction against other advertisers who want to show their ad as well. The winners’ ads are shown and the advertiser gets charged if the user clicks on the ad.
How does Google choose which ads to show?
Three main factors influence whether your ad comes up or not: Quality Score, Ad Rank and keyword bids.
Quality Score: a number between 1-10 that is assigned to each keyword with 1 being the lowest and 10 being the best score you could get. It is made up of expected click-through-rate (CTR) based on historical performance, landing page experience and relevance of the user’s search to your keyword and ad.
Keyword bid: In the past, you would have assigned individual bids manually to each keyword but nowadays, Google does this automatically based on your campaign budget and goal settings.
Ad Rank: the combination of keyword bid and Quality Score that determines whether your ad is shown and if yes, in which place.
You can see that even though the monetary factor does play a role in the Google Ads system (it’s an auction, after all), there are some other components that significantly impact your ads’ performance.
Looping back to Google’s core principle of relevancy, a high bid alone won’t get your ad to the top. Instead, it is all about high-quality and relevant ads and keywords and these are factors that you have lots of control over when it comes to setting up and managing your Google Ads account.
That means that even with a smaller budget your Google Ad campaigns can perform well if they follow best practices and are presented to the right audience. Get in touch with JK Digital if you are ready to get started with Google Ads for your business.