How Do Google Ads Auctions Work?

December 15, 2021

How Do Google Ads Auctions Work? | AIA Book in a free 30 minute strategy session

It’s no secret that Google Ads are a powerful tool for advertisers…

The system has many complexities and nuances, but if you want to become successful with it all – from targeting ads in specific geographical areas or languages on your website just by typing them into Google search bar- then let me break down how exactly these things work.

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What Is the Ad Auction?

Google Ads is a staple in digital marketing, but many businesses still don’t know how to take advantage. It’s time you caught up with the latest strategies for running successful ad campaigns on Google.

Because there are so many advertisers on Google Ads, there is also a high likelihood of multiple businesses having similar approaches:

  • Similar budget
  • Similar targeting
  • Similar keywords

Google Ads will deliver a specific ad when there is a keywords match in the search query while taking into consideration the advertiser’s target audience requirements. But if there are multiple ads from different advertisers that technically should in all the search engine results pages, Google needs a way to determine which ads are shown, and which are not for a specific page.

Enter the ad auction – Google’s way of determining which ads are delivered, and the order in which multiple ads are shown.

The Auction Insights tool allows you to see who’s entering the same Google ad auctions as your company. You can test how competitive an industry is by looking at these competitors and their spending, which will help shape future marketing efforts accordingly.

How Does It Work?

Each time an ad is eligible to appear on a search result page, it will go through the ad auction. This process looks something like this:

  • A user types in a search query in the search engine;
  • Google Ads identifies all the ads that match the keywords of the search;
  • The system looks at ad eligibility, such as target audience or location. Those that are not eligible are not put into the ad auction;
  • From the eligible ads, Google takes into account those that have a high Ad Rank and delivers then to the user.

Why Ad Rank Is So Important

The Ad Rank is like a grade for your ad impressions and takes into consideration many factors. Google cares about their users having the best experience possible, so naturally this weighs heavily on what they rank in search engines.

Here are some factors that determine Ad Rank:

  • The bid amount – how much you are willing to pay for a click
  • Ad quality score
  • Ad expected impact when it comes to covering (clickthrough rate, landing page quality, etc.)
  • The context of the person’s search query (who they are and where they are)
  • The expected impact of ad extensions and other ad formats (such as call ads)

The Ad Rank is a number that changes depending on the search keywords you use and how many ads there are competing for ranking in your desired position. It goes up when an ad has been clicked, but can also drop down if another similar advertisement was clicked before yours or something about their query changed enough so they no longer want what was originally shown as results from this website.

Does Higher Bidding Bring Better Results?

The cost per click that advertisers pay is only one part of what Google looks to in order for their ads and ad space. Even if you go with a maximum bid every time, this doesn’t necessarily guarantee your message will always be delivered or have top billing on the page when it does show up. There are other factors like the location at play here as well which can significantly affect where shoppers see an advertisement – so make sure they align perfectly.

But that’s actually a good thing. Because even if your competitors are willing to pay a lot for just one click, it doesn’t mean they will get ahead of you in the auction process and take away all potential buyers with their higher-priced inventory because your budget is smaller.

Google stresses the idea of providing a good user experience on its help pages because it wants to ensure that more people can find what they need. If Google takes Cost Per Click as an indication for delivering ads, then only big businesses with large pockets would be able to afford this service; however small-business owners are still given hope if their campaign targets specific keywords which match those being searched by potential customers.

Over to You

Australian Internet Advertising is here to help you make the most of your Google Ads. We’re experts in crafting and optimising campaigns, so get in touch with us today for a free consultation session!

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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