What is Google Ads and How Does it Work?

3 Minutes Read

Nowadays, everyone uses online search engines, whether it’s to search for a product or to look for answers on a specific subject.

That is a massive opportunity for any business to reach out to potential customers by delivering the product they are looking for or providing them with the correct answer to their questions.

But as most markets are highly competitive and your competitors may already have a significant online presence, it is not easy to immediately get visibility in search results.

Search engines offer businesses the ability for their ads to appear at the top of the search results page by paying according to a pay-per-click (PPC) model. That is a tremendous opportunity for businesses to increase their online presence and earn instantly more visibility on search engines.

There are several search engines, which are offering advertising platforms. Depending on your target audience and the country you are operating in, particular search engines may suit your business better.

Since Google is the market leader, in this article, we will focus on Google and its Google Ads platform. Read more in our article “Search Share of Search Engines by Country”.

Table of Contents:

  1. What is Google Ads?
  2. How do Google Ads work?
  3. How much does Google Ads cost?
  4. How does the Google Ads auction work?

1. What is Google Ads?

Google Ads, originally known as Google AdWords, is a pay-per-click (PPC) advertising platform offered by Google.

The basic idea is to find your prospects and repeat customers online whenever they are searching for a product or service. That enables you to capture them when they are in the search and purchase funnel.

So when users search on Google by entering a keyword, they get their search results on a search engine results page (SERP). It is here where the opportunity to show your products or services to those who have searched may occur by targeting those keywords and placing your paid advert in the SERP section.

You can see that the search results are split into two sections: the paid search results and the organic search results. While these look similar, the paid search ads have the bold/negrito “ad” at the top of the post.

Depending on your ad ranking, your ad may not appear at the top of the page, as is the case here. There are plenty of other competitors bidding for the very exact same keywords.

But how does Google decide who will appear first? Let’s delve deeper into how Google Ads works and what you should take into account to improve overall performance.


2. How do Google Ads work?

Once you have created a Google Ads account, you can start creating campaigns and bidding on particular keywords.

Google Ads, as mentioned earlier, uses a pay-per-click (PPC) model. Marketers create their ads with keywords they would like to target. For each keyword, Google enables you to set a maximum bid, the maximum you are willing to pay for an ad. The right amount of your maximum bid depends on several factors:

  • competitors,
  • ad relevance,
  • landing page experience
  • expected click-through rate (CTR).

The last three, ad relevance, “end” page experience, and CTR allow you to arrive at the quality score. Google determines this score by considering the relevance of your ad to the customer’s search query, set as well as your “end” page is well done. Google considers all these factors to provide a good customer experience after their search.


3. How much does Google Ads cost?

This auction runs whenever a user searches on Google, to determine the ad positions for each ad. Let’s take a closer look at how the GoogleAds auction works.


4. How does the Google Ads auction work?

Each time a search happens on Google, the auction starts to determine if your ad is displayed for the targeted keyword and what ad position it will have.

Here’s how the auction works:

  1. Once a user searches on Google, the Google Ads system will start finding all the ads with keywords that match that specific search and are eligible.
  2. Google then enters your account’s keyword into the auction along with your maximum bid information in the bid and quality score.
  3. It then determines your position by multiplying your maximum bid and Quality Score.
  4. The position of the next highest ad below you divided by your Quality Score will determine the price you must pay per click (PPC).

This process runs with all Google searches to determine if an ad is displayed on the search results pages, which ad positions, and what CPC the advertiser has to pay.

From the initial keyword research to the campaign building, running campaigns on the Google Ads platform can be time-consuming, constantly monitors and improves its performance.

At Link37, we are experts in PPC ads and have experience in the Google Ads Platform. Let us help you run successful PPC campaigns to grow your business!


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