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How Does The Google Ads Auction Work?

July 20, 2020

How Does The Google Ads Auction Work? | AIA Book in a free 30 minute strategy session

Learning how Google AdWords work is not easy. The system is incredibly complex and can be quite overwhelming for many, but if you want to successfully advertise on Google, you need to become familiarised with the many nooks and crannies of this PPC service.

In this article, we’ll take a deeper dive into how the Google Ads auction works, and how to go out when you’re setting up your ads.

What Is the Ad Auction?

Google Ads is a staple in digital marketing, and a lot of businesses are extremely active on it, running extensive ad campaigns on Google’s vast network.

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 all appear in the search engine result page, 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.

You can test just how competitive your industry is in your Google Analytics. The Auction Insights tool allows you to see who’s entering the same Google ad auctions as you.

How Does It Work?

Each time an ad is eligible to appear in 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 value used to determine your ad position, and it takes into consideration a lot of criteria, most of which have to do with the quality and relevance of your ad. Google cares most about giving their users a good user experience, so naturally, the Ad Rank holds a lot of weight here.

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)

Note that the Ad Rank is recalculated every single time your ad is eligible to appear in the search results and goes into the auction. It’s possible for the ad to be placed on top after one action, then be completely disregarded the next, because something small in the person’s search shifted, and the quality of the ad itself drops.

Does Higher Bidding Bring Better Results?

The cost per click that advertisers pay is taken into consideration, but as you can see it’s only one part of what Google looks to in order to deliver and arrange ads. Even if you go with the maximum bid every time, that’s no guarantee your ad will always get delivered, or that when it is delivered it will always get a top spot.

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 if your budget is smaller.

Google really stresses this idea on its help pages because, again, it wants to ensure good user experience. If they just took the cost per click as a way to determine which ads get delivered, then Google Ads campaigns would likely only be reserved for big businesses with large pockets. Instead, even small businesses have a shot, as long as they target the right keywords.

Over to You

Australian Internet Advertising has a team of Google Ads experts to help ensure your Google ads are optimised, reach the search results, and help you get closer to your business goal. Get in touch with us to learn more about how we can help you.

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