Google AdWords: What They are, How They Work, and How to Get Started

December 28, 2022

Google AdWords: What They are, How They Work, and How to Get Started | AIA Book in a free 30 minute strategy session

Did you know there are almost 2.3 million Google searches taking place per second? More than one billion people use Google search, and most of the search results pages, or SERPs, have Google ads on them. On most SERPs, the first three listings are paid-for ads. Businesses can purchase Google Ads as a way to get their offerings in front of people quickly. Google Ads will drive traffic to a business’s website and in turn, increase their sales and conversions. No matter what product or service you’d like to sell, launching a Google Ads Campaign Management Strategy will help your business grow. Keep reading to learn more about Google ads with our in-depth guide. Learn what Google Ads are, how they work, and how you can get started with an effective campaign today.

You might also be interested in WHAT ARE THE BEST TIPS TO RUN A GOOGLE AD CAMPAIGN

What are Google Ads (Google AdWords)?

Google is one of the largest and most popular search networks in the world. Taking advantage of Google’s advertising platform, Google Ads, aka Google AdWords, will get your business in front of the world’s internet users when you use the Google Ads keyword bidding and auction platform.

Where exactly can your Google ads appear? The Search and Display Network

Google Ads Placements

When you invest in a Google ads campaign, the ads you create can appear in a few different places. The different types of Google ads you create will trigger, or display depending on what parameters you’ve set. We’ll cover those different types of ads and triggers in more detail later on in the article.

They could display on the SERPs, which is one of the most popular options for Google Ads. However, you could also set up your Google Ads to appear on other websites. This extensive family of sites is called the Google Display Network, or GDN, and a part of the AdSense program. Youtube is a part of the GDN, and so are Gmail and Google Finance. The GDN is also home to millions of different mobile apps and sites where your ads can display.

If you were to enter a keyword phrase into the Google search bar, say, “best fall boots,” the first link at the top of the page will have a small “ad” written next to it. This link is a Google Ad. Below links with an “ad” next to them are organic search results, or unpaid links they have gotten to the first SERP without advertising help. On the GDN, however, things look a little bit different.

The GDN is home to an extensive collection of third-party sites that have partnered with Google to offer businesses an advertising platform. A Google Ad that displays on the GDN will appear in several forms, but mostly as banner ads. GDN ads can also appear in the following formats:

  • Text ads
  • Video Ads
  • Image Ads
  • Rich media ads

All of these different ads can be designed to trigger based on various actions. Also included with GDN ads are retargeting ads for more extensive marketing campaigns. When using Google AdSense, ads will show up on different places on a website.

Bidding and Auctions: Why Google Ads appear on the GDN or SERPs

Auction Insights

When someone sets up a Google ads campaign, they will be entering a bidding auction based on keywords. Marketers will make a list of keywords to use for their ads that must be relevant to their offerings. These keywords are terms and phrases that people use when searching for a particular item on the internet. Advertisers will bid on the keywords. Keyword bids are determined based on how much marketers are willing to pay for clicks on the ad.

The bid amount is combined with what Google calls the Quality Score to determine which ads, and in what order, appear on the SERPs. The Quality Score is proprietary and, basically, a secret algorithm that Google uses for the ad program. What marketers do know about the Quality Score is that it is an overall estimate of the quality of an ad campaign’s ad copy, keywords, and landing pages the ads take viewers to when they click on them.

A better Quality Score equals lower costs to run the ads, but better ad positions. Getting a good Quality Score will mean that you pay less for each click on your ad, but your ad itself is far more likely to land the conversion rates you want. Marketers can find their Quality Score when they add a Quality Score column to an ad report.

What else should you know about the Quality Score?

Quality Score

  • The Quality Score is based on a scale of one to ten
  • The score will show marketers their expected click-through rate (CTR), the relevance of the ad for its keywords, its ad group, and the quality of your landing pages
  • Quality Scores are used to estimate the ad’s overall performance in the Google Ads bidding auction
  • The historical CTR for the individual ad and ad group
  • Overall performance of the ad account based on historical data
  • Quality Scores aren’t used at auction for determining Ad Rank

When viewers click on a Google Ad, the business will pay an amount called a cost per click or CPC rate. The CPC rate is calculated based on this formula:

Competitor AdRank / Quality Score + .01 = CPC Rate

The way Google ads bidding works is where the terminology pay-per-click comes from. Essentially, marketers are paying for each time a person clicks on their ad. It doesn’t matter whether the ad is located at the top of the SERPs or on a popular GDN website.

Budgeting, Bid Adjustments, and the Google Ads Auction

Bid Adjustments

The Google AdWords system runs on an auctioning foundation. So, every time someone performs an internet search, an auction through the Google Ads system is taking place based on the terms that a person has entered into the search bar. Winning a Google Ads auction means your ad will appear on either the SERPs or GDN, depending on what you’ve set up. The ad will display for your keywords, but you will be required to tweak and optimise your bids and your Quality Score.

Making bid adjustments and improving your Quality Score will ensure that your ad is well-positioned. These actions will also ensure that your ads will remain within your budget and give you the conversion rates you’re after. The benefits of having a good Quality Score along with making strategic bid adjustments will provide your ad campaign with the following benefits:

  • Overall lower costs to run the ad, resulting in an improved return on investment
  • Greater ad exposure, ensuring your ads appear frequently and in the top positions

In general, the position of your ad is determined by the Quality Score, and the Maximum Bid you’ve set for your keywords list. The best advertisement, based on these different formulas, will get the highest position. The CPC rate you’ll ultimately pay is based on the ad rank of the next highest ad, positioned below your higher-ranking ad, divided by your Quality Score. But there are a couple of exceptions to this rule.

If you’re the only bidder for a keyword, or you have the lowest bid in the auction for your targeted keywords. In these instances, you’ll pay the maximum bid cost per click. If you’ve got a low-Quality Score, then lookout. You could quickly blow through your marketing budget with very little to show for it at the end. AdWords punishes marketers who place bids when they have a poor Quality Score.

The best positions for Google Ads are higher up on the SERPs. The first position on the SERPs gets an astounding 20.5% of internet traffic. For marketers, snagging this top position is a coveted achievement. Overall though, you’ll want your ads to appear within the top three search results rankings. When your ads get the higher positions based on strategic bidding and the Quality Score, then you’ll get more clicks and sales, but you won’t have to raise your bid prices. With this in mind, it’s how you would protect your ad spend while getting the most out of Google Ads for marketing your business.

Google Ads: How Keywords, Match Types, and Negative Keywords Work

When it comes to search engines like Google, keywords are everything. Keywords are the language of the search engines, and in turn, the language of your Google Ads. Why are keywords so important for running an effective Google Ads campaign?

For one thing, keywords are what connect an internet user’s search terms to the relevant ads you’ve got running in AdWords. You want your ads and keywords to align and ensure your ads are as appropriate to the search terms your ideal customer will be using when they trigger your ad. So not only do marketers need to create a targeted, relevant keyword list, they also have to understand their ideal buyer’s intention behind using specific keywords.

For example, if someone enters the phrase “chocolate cupcakes,” marketers must determine their keywords and design their ads with the understanding of whether or not those search terms indicate someone wants to find a recipe or a bakery. The way Google AdWords uses keywords and their match types is a little bit complicated. But mastering this part of the AdWords process is vital to your campaign’s overall success.

For every keyword a marketer uses, they will have to give it a match type. Keyword match types are responsible for determining a user’s intent behind the search terms they’ve used. Match types can be set to determine broad keyword intentions to very narrow keyword intentions. The different match types are:


  • Broad Match
  • Phrase Match
  • Exact Match
  • Negative Match
  • Broad Match Modifier

Using broader keywords and setting keywords to “broad match” will give you a greater reach across the search network and display network. Sometimes, your marketing goals will call for using Google Ads that are set to broad match. But sometimes, broad match keywords won’t be relevant enough and will harm your quality score. We’ll go into more detail on how the different match types can help or hurt your Google Ads campaign.

Broad Match Keywords

Broad match keywords will trigger your ads when similar or slight variations of the phrase are used, and you win the bid. What are close variations? They could common misspellings of certain words. Broad match keywords could trigger your ads to show when people use a plural form of the phrase, or they use abbreviations or acronyms. For example, you could set a broad match keyword for an ad for “desktop computers.” Your ads could trigger for the words computers, laptop computers, Apple computer reviews, or similar.

In some instances, broad match keywords can be problematic. They can trigger for variations that may not align with your marketing goals. If you use broad match keywords, you’ll want to closely monitor them for conversions and bid amounts so you can protect your ad spend. But keep in mind, that if you’re using the GDN to display your ads, the GDN only allows for broad match keywords.

Negative Match Keywords

Negative Keywords

There are going to be keywords and phrases that you don’t want to trigger your ads. The words “sale,” “cheap,” and “free” are often set as negative keywords for a lot of AdWords campaigns. For example, if you’re advertising desktop computers, you may not want your ads to trigger when someone enters the term “cheap desktop computers.” When you set negative match keywords, they prevent your ads from showing up when someone uses those specific terms.

Negative keywords can improve an ad’s relevance and your Quality Score in a few different ways. Say you’re still advertising desktop computers, and you don’t want your ads to trigger when someone searches for laptops. You could use the keyword “-laptops” to prevent your desktop computer ads from triggering when people search for laptops.

Remember the other keyword match types on our list? Broad match, phrase match, and exact match can all be made into negative matches. Broad match modifier can’t. Here is how the different negative keyword match types work:

  • Negative phrase match keywords would not display when the precise term is the entire search query someone enters into the Google search bar
  • Negative keywords (negative broad match) means the keywords don’t show up for the whole term, no matter what order the words are entered into the search bar

Advertisers will need to keep in mind that broad match keywords and negative broad match keywords don’t work the same way. Negative broad match keywords do not trigger for close variations of the search terms. It’s also important to note that a negative keyword has to be in the search query to stop an ad from showing. Negative broad match keywords don’t automatically expand to include synonyms, or singular or plural differences.

For example, the negative keyword “-laptops” would not automatically expand to “-laptop.” You would have to make “-laptop” another separate negative keyword if you don’t want the ad to trigger for that particular term.

On the GDN, negative keywords can also be targeted. They are called “keyword exclusions.” How do these types of keywords work? The ads won’t display on websites that contain the keyword exclusions. But remember, negative keywords are only broad match types for ads on the GDN.

Broad Match Modifier Keywords

Keywords and phrases with a plus (+) sign need to show up in the user’s search terms precisely, or as a very slight variation. Misspellings, changes in plural or singular, stemming differences, and abbreviations or acronyms can be used as broad match modifier keywords and phrases. Ads will also display for keyword phrases set to broad match modifier that also include additional terms.

Phrase Match Keywords

Setting your keywords to “phrase match” means your ads will trigger when users enter the exact phrase you’ve targeted into the search bar. These keyword match types also allow for additional words along with the phrase match. For example, let’s say you’ve selected the phrase match keyword “desktop computers.” A phrase match keyword could be “desktop computers up for sale.” ‘

Exact Match Keywords

When you target exact match keywords, your Google Ads will display for search terms that match the precise phrase you’ve selected with no variations or new words. Ads will only trigger when the search enters the terms in the exact order you’ve chosen, too.

Are there situations in Google Ads where no keywords are selected?

Keywords and having a well-thought-out strategy behind them is crucial to the success of your AdWords campaign. However, the type of ad format you’re going to use is also critical. There is one type of Google Ad format that does not use keywords, and these are called Product Listing Ads, or PLAs. eCommerce businesses typically use these types of ads.

While keywords have no impact on PLAs, advertisers can set negative keywords for these types of ads to prevent them from displaying. Advertisers can place negative keywords for PLAs at either the campaign or ad group level. Otherwise, a PLA will show up based on product targets in an advertiser’s Merchant Account. These targets determine when the ad will show up in the sponsored results.

Google Ads: The Importance of Landing Pages

Landing Page

Your Google ads will take a viewer to a dedicated landing page that you design whenever they click on your ads. Landing pages have to be relevant to the ad that a viewer sees. Otherwise, you’ll severely harm your conversion rates and your Quality Score. Ads that don’t lead to conversions, thanks to a poorly designed or worded landing page, can result in higher costs per click without the desired spike in sales.

Why else are landing pages so important? For one thing, the ad is what initially entices viewers to check out your product or service. But the landing page is what ultimately convinces them to make a purchase, place a sales call, or take whatever desired action you want. A high-quality landing page will increase and optimise your conversion rates, while low-quality landing pages will not only hurt your marketing budget, they will also harm your business reputation.

What’s the most important quality your landing pages should have? When it comes to Google Ads campaigns, the most important landing page quality is relevance. Your ad text or copy should include your keywords. But your landing page should be relevant to its dedicated Google Ad.

What does your ad promise the viewer? Whatever it is, your landing page needs to deliver. Do that, and your landing page will give you the conversion rate you want, along with better ad rankings and a lower cost per click. While it’s important to dedicate time to studying and creating a keywords list and making your ads, it’s equally important to spend time carefully crafting your landing pages for AdWords.

What is dynamic text insertion for AdWords landing pages?

Dynamic text Insertion

A dynamic landing page is a landing page that changes based on who is viewing it. These landing pages will display different copy and messages to the user, based on that person’s online behaviour. One type of dynamic landing page you can use for Google AdWords is called dynamic keyword or dynamic text insertion. This tool lets advertisers optimise the relevancy of their landing page’s message based on what words the viewer used in their search query.

For example, a dynamic landing page for a clothing site with text insertion capabilities could change its headline based on the keyword a visitor used to find the landing page. If a viewer searched for the term “green maxi dress,” a dynamic landing page with text insertion could show a headline that reads, “search for green maxi dresses.” Say another visitor uses the search terms, “black cocktail dresses,” then the headline could read, “search for black cocktail dresses.”

Personalisation is everything today when it comes to successful marketing campaigns. Personalised campaigns see higher conversion rates and are an excellent tool for building brand awareness and increasing audience size. A personalised campaign, such as a dynamic landing page, will speak to the viewer more directly and help them find what they are looking for.

Advertisers on Google also have a few other options when it comes to optimising and tweaking their landing pages for increased conversion rates. It’s also possible to change the landing page based on whether or not the person viewing it is a repeat customer. For example, a landing page that is dynamic for a first-time visitor could show a CTA to place a consultation call. For a repeat visitor, the CTA could display the number for a customer support line.

When do dynamic landing pages work best for PPC?

When it comes to marketing campaigns, testing, tweaking, and optimising are crucial to their success. It’s not a bad idea to test different dynamic landing pages to see how much your conversion rates increase. In most instances, the higher the number of landing pages you have, the better your conversions and sales numbers will be. Creating numerous specific landing pages adds personalisation and increased value to the campaign, making it more likely to deliver what your target customer wants.

One way to create dynamic text landing pages in Google AdWords is to make a relevant landing page, then change the headline or the ad copy to reflect the ad group it’s dedicated to. If you have smaller ad groups, this technique can work well. In general, small ad groups with keywords that are closely related are part of PPC campaign best practices.

Google AdWords: The Importance of Analytics and Conversion Tracking

Tracking the performance of an AdWords campaign isn’t something you can ignore. Knowing how your ad is are performing will give you insight into where you can test different options for higher conversion rates. If you don’t have access to accurate and detailed tracking measures, you won’t know when an ad is dragging down your campaign. If that happens, you can easily blow through your marketing budget and hurt your business’s bottom line. Fortunately, there are many effective ways to track your Google Ads campaigns.

Using AdWords conversion tracking through Google Analytics will give you relevant and crucial information on what people do when they engage with your ads. Did they sign up for your newsletter, or buy one of your products? Google Analytics conversion tracking can tell you all that and more. In essence, Google AdWords conversion tracking lets you see if a viewer takes the action you’ve defined. That definition is called a “conversion.”

The Benefits of AdWords Conversion Tracking

There are many benefits to using Google Analytics for conversion tracking, but here are the main advantages:

  • Conversion tracking helps you figure out which campaigns, individual ads, and ad groups are the most profitable for your business
  • Conversion tracking enables you to make informed decisions for your marketing budget
  • You can use conversion tracking to optimise your return on investment

You can use the insights you gain with conversion tracking to further test and tweak things like landing page copy, headlines, ad text, and CTAs. Tracking conversions through Google Analytics is one of the easiest ways to gain granular, valuable information on your campaign’s performance.

Why should you use Google Analytics for conversion tracking?


If you already have Google Analytics integrated with your business website, then your Analytics account will have a wealth of information on your customer’s interactions. Google Analytics, when it’s connected to your AdWords account, will give you even more insight into viewer and customer behaviour. The benefits of using Google Analytics with AdWords for conversion tracking are:

  • You’ll see exactly how your ads perform with Google Analytics reports along with other in-depth website data
  • Google Analytics Multi-channel Funnels Report gives you even more data on your business and Ads campaigns
  • When you link these accounts, you can import your Google Analytics metrics, eCommerce transactions, and marketing goals into AdWords

Google AdWords: The Different Types of Ads and Ad Formats

ad placements

Your Google Ads need to catch the viewer’s attention with striking, but relevant visuals and compelling ad text or copy. Search ads that show relevant information for your business, such as your website domain or your business phone number will give you higher conversion rates. It’s possible to manually ad different ad formats and enhancements yourself, or let Google’s automated process do it for you.

What are the most common types of ad formats? Ad extensions for Google AdWords are the most popular form of ad format. These include things like location extensions, which display your business address to your ads. Sitelines are another popular ad extension that lets you display additional links to other pieces of content on your site that are relevant to the ad’s purpose and message.

But what about the automated formatting system? This system will display additional information, either listed on your website, or from third-party sites that are relevant to your ads. The automated ad format systems also show relevant information in your ads that can help viewers find your business location. Advertisers should be aware, though, the Google Shopping ads are not an ad format.

Google AdWords: Shopping Ads and Campaigns

Shopping Ads

Google shopping campaigns are the ideal ad type for eCommerce businesses with retail websites. Google shopping ads can help you move both online and offline inventory, and increase traffic to your business site or foot-traffic to your local store. Shopping ads are a little bit different than search display or GDN ads, though, and can seem a bit daunting if you aren’t familiar with them.

Getting started with shopping ads requires merchants to have a product feed with relevant product data already uploaded to their Merchant Center in Google AdWords. Google then takes that information and creates shopping ads that will display around the internet. These automated placements are called Google Shopping Ads. These ads display far more than a simple text ad on the search network.

With shopping ads, viewers will see an image of the product, the product title, your eCommerce store name, price of the item, and other relevant data. One of the goals of an effective Google shopping ad is to give the viewer a lot of information about the product. When you do that, your leads will be more highly qualified, and you’ll get a better cost per click, along with higher conversion. But for this to happen, you’ll need to optimise your product feed.

Google AdWords: Youtube Ads

Video Ads

53% of surveyed customers will engage with a brand after they see a video. Video marketing is incredibly useful for driving traffic, increasing brand awareness, and moving product. Using AdWords to promote branded videos on Youtube is a newer advertising format with the Google network, so there isn’t as much competition here as there typically is with search display ads.

AdWords for Youtube lets you show your brand videos across the Youtube search results pages and on the GDN. Your videos will display before, during, and after other relevant videos, allowing you to get your unique offerings in front of new leads. AdWords for Youtube enables you to take advantage of unique and granular demographic targeting options. The targeting options aren’t complicated. You can set your ads to trigger based on the viewer’s age, interests, and gender. Unlike the search network and other AdWords ads, you have more control over who ultimately sees your Youtube ads.

Google AdWords: Gmail Ads

Gmail Ads

There are more than 1 billion active Gmail users in the world. For marketers, getting their ads to display to people through Gmail can help drive increased conversion rates and build their brand awareness. With Gmail ads for AdWords, your ads will display in both the Social and Promotions tabs for Gmail inboxes. These interactive ads give you many options, including the ability to expand the ads when clicked, just like a regular email. You can also create Gmail ads to include relevant and striking images, videos, and embedded lead capture forms. These ads are far more personalised than other AdWords formats.

Google AdWords: Dynamic and Responsive Ads

Dynamic ads and responsive ads are two types of image ads. Dynamic display ads will automatically fill in product feed data within the ad template. In most instances, marketers will use dynamic display ads as part of a targeted remarketing campaign. These campaigns are based on user behaviour. For example, after someone visits a website, a dynamic display ad is triggered and used to re-engage the visitor. Google will serve up personalised dynamic ads across the GDN to entice past visitors or purchasers to come back to your offerings and make another purchase, or otherwise engage with your brand.

Responsive ads, on the other hand, are ad types that automatically change to fit the available ad space. They can adjust their appearance, format, or size for higher conversions and user experience.

What is Google Tag Manager?

Google tag manager

Marketers should take advantage of every tool at their disposal for AdWords campaigns, especially free tools. Google Tag Manager is a free tool that marketers can use to manage and launch different marketing tags. Marketing tags are lines of code, or tracking pixels that are added to a business website or a business app automatically. Business owners do not have to change the code, so it eliminates the need for expensive developers.

Here’s a simplified version of how Google Tag Manager works:

Your eCommerce website shares data with Google Analytics via Google Tag Manager. Google Tag Manager makes it much easier to manage many different tags since all of the different codes and tracking pixels are housed in one easy to use and access place in Google AdWords.

Google AdWords: SKAGs

Even the most robust and effective Google AdWords campaigns can go stale at some point. One easy and quick way to breathe new life into your campaigns is with the SKAGs technique, which stands for Single Keyword Ad Groups. With this technique, marketers take several variations of one keyword and use it to target one ad group.

Although it’s possible to use up to 20 keywords for an ad group, narrowing down your keywords to one term or phrase can improve PPC campaigns. Highly targeted, relevant, and related ad groups and keywords help improve your Quality Score, which will lead to higher conversions but lower ad costs. If your campaigns seem to have run out to steam, give this technique a try.

Google AdWords: IP Blocking

Ip Blocking

If you keep getting unwanted clicks to your ads from a specific neighbourhood on the internet, it can drive up your costs and hurt your conversion rates. When this happens, Google takes note and can lower your Quality Score. Fortunately, you can stop this from happening with IP blocking capabilities through AdWords.

Individual computers or networks won’t be able to interact with a campaign thanks to IP blocking. One example of how this could work and why it’s a good idea to use this feature is when your marketing team is checking your site’s organic search results. If your ads sometimes display during these checks, then you don’t want the unnecessary impressions or clicks to be calculated. So, you could use IP blocking to block your company’s network IP address from the ads campaign.

Using the Google Adwords Editor

Adwords Editor

Situations can arise where you’ll need to manage and edit your Google ads even when you aren’t connected to the internet. With Google AdWords editor, you can. Google AdWords Editor is a tool you can download onto your computer. The tool allows you to manage and change your campaigns while disconnected. Once you’re finished editing your campaigns, you can sync the AdWords editor to your AdWords account, uploading your changes.

Getting Started with Google AdWords

Google AdWords is an incredibly effective digital marketing tool to have in any business’s arsenal. With Google AdWords, you can get your unique products, services, and offerings in front of your ideal customer. Effective AdWords campaigns will drive increased sales and conversions for your store, but they aren’t easy to create, launch, and optimise. With AdWords, you have access to highly granular data and targeting capabilities. To protect your marketing budget, this isn’t something that amateurs should attempt.

At Australian Internet Advertising, we’ve been creating, launching, and managing detailed Google AdWords campaigns for clients in various industries. If you’re ready to grow your brand awareness across Google, the largest search network in the world, speak to us today. We’ll be glad to answer your questions and get you started with a customised Google AdWords campaign.

Billy P.

About The Author

William Polson founded Australian Internet Advertising in 2013 and has over 12 years of experience immersed in Digital Marketing.

With an in-depth level of digital marketing knowledge, William has been sort after by and worked for, many large national brands including Subaru, Blooms The Chemist, and Nova 96.9.

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