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What is Google Adwords and How Google Ads Works

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Every second, millions of people do searches on Google, and most SERPs include Google ads on the top and bottom of the organic results. Google owns nearly 80% of Search Engine Market Share, so there are many opportunities to get the business or brand known to people. Therefore, Google ads could be a profitable decision to get a business in front of people and acquire relevant and quality traffic to the website when people search for the services or products offered.

Let us see what Google ads is, types of ads, and how they work.

What is Google Ads (Earlier known as Google AdWords)?

Google Ads is an online advertising platform by Google that allows you to create ads and show it to audiences interested in the services or products you offer and searching for the keywords you have selected.

Google Ads platform runs on PPC advertising. Now the next question is: what is PPC?

PPC (Pay Per Click) is an online marketing model in which advertisers have to pay every time the ad is clicked.

Google Ads allows you to

  • Build a massive audience for your business or brand.
  • Advertise to local as well as global audiences.
  • Reach the right audiences at the right time.
  • Control your budget.

Types of ads in Google Ads (AdWords)

Let’s have a look at each ad type in detail

  • Search Ads

Search ads are text ads, and whenever a user searches on Google, a list of results appear on the search engine result page (SERP) in which search ads are listed above organic results.

For example, when a user searches for “Digital marketing services in Mumbai”, the search result page will look like this.

Search Ads

In the above image, the ones marked as “Ad” are ads.

Main factors in search ads are

  1. Targeting – For example, you can choose the specific or multiple geographies where the ad is to be displayed.
  2. Search query and keyword What user is searching for, plus the keyword for which the ad is optimised.
  3. The relevance of ad copy – Ads that appear in SERP should be relevant to the search term. That means a search for smartphones should not throw the results for cars.
  4. Landing Page experience – The measure of how relevant is the landing page to search query and the searcher’s expectation.
  5. Bid – The amount of money an advertiser is ready to pay for an advertisement on each click. For example, if two advertisers have perfect ads and correct landing pages, then the ad with the higher bid will get preference.
  6. Conversion Rate – Percentage of visitors on your ad who take the desired action, and it is dominated by relevance, quality of landing page, and experience.
  7. Quality score – It is the measure of the quality of your ads, landing pages, and keywords. 
  • Display Ads

A display ad is an advertising process where a product or service is displayed in the form of visuals like images, banners, or videos on the relevant third party websites. Display ads appear only on ad-supported websites.

Now, let’s see how display ads look.

Display Ads

Here, the user is not looking for what the ad offers, but based on the factors like keywords, the interest of audiences, managed placements, and so on, Google decides to show these ads to you.

Google selects the websites to place the display ads based on the following targeting criteria.

  1. Keywords – The ads are displayed based on keywords that they are optimised for. Let’s say the ad keyword is “Digital Marketing Agency”, then Google will select websites that has content on this topic.
  2. Placements – It refers to the location where the ad is to be displayed. Add the websites where the ad is to be shown. For instance, if you want to display your ad on education-related websites, then add the advertising-supported educational websites to your targeting.
  3. Topic – In Google ads, websites are grouped under specific topics. Therefore, advertisers can easily select topics related to their business. For example, websites related to education will be listed under the topic of “education”.
  • Shopping Ads

Shopping ads are the ads that involve detailed product information like product image, its price, merchant name and more. This ad type boosts website traffic and helps to generate quality leads and increase conversions.

Shopping ads would appear on SERPs in the below format

Shopping Ads

Actions required for running shopping ads

  1. You need to set up an account with Google Merchant Center and Google Ads and link them together.
  2. You need to submit data of the product every 30 days to Google Merchant Center.
  • Video Ads

Video ads let advertisers run ads before, during, or after streaming content. Video ads can be displayed on YouTube and other Google Display Networks.

Example: Video of Wix.com

Video Ads

  • Universal app campaign

Universal app campaign (UAC)is an automated ad type in Google ads. This ad type is helpful for a business with a mobile app. UAC helps advertisers to promote the mobile app over PlayStore, Search, Display, YouTube, etc. Google Ads uses resources like text ads from the app store listing. Budget, some text, a starting bid as well as languages and locations is required to set up the ad.

Google Ads make use of all this information to design various ads in different formats. Google displays the best performing ad by automatically testing different combinations.

This is how the app ads can appear.

App Ads

Image Source: Google

How Does Google Ads (AdWords) Work?

Google Ads works on an auction system. When users type a search query in a search engine, Google finds all the ads that matches the search query. If more than one advertisers are bidding on a keyword that is relevant to the user’s search query, then an auction is automatically triggered.

Position of your ad on SERPs is determined by ad rank. Let’s have a look at the factors for ad rank:

  • Bid amount

When you set your bid for an ad, you are telling Google that this is the maximum amount you are willing to pay for a click on your ad. Higher bidding means higher rankings. But bidding high is not enough for ranking.

  • Quality score

It indicates how relevant an ad group is, an ad and the landing page to what a user is searching for. A higher-quality score produces better campaign results since it improves ad position, increases CTR, and reduces the cost.

Following three factors controls the quality score

  1. Expected clickthrough rate (CTR) – It estimates the probability of your ad being clicked by the users when displayed for a particular keyword in SERP. Google Ads basically consider the past performance of the keywords based on your ad’s position. Your expected CTR can have three statuses that are Average, Above average, and Below average. If CTR is higher than average, you can expect a better quality score.
  2. Ad relevance – It is a matrix that evaluates how closely your keywords are related to your ad copy. Again, there are three ad relevant statutes as expected CTR, and with the help of these statuses, you can identify which keywords are not relevant to your ad and make changes accordingly.
  3. Landing page experience – Google decides landing page experience based on how relevant is your landing page to the ad and how much it is relevant to the user’s search query. Landing page experience status shows whether the landing page has provided a good experience to the users who have landed on the page after clicking the ad.
  • Ad Extension

Ad extension is additional information that broadens your advertisement to make it more useful for users. Ad extensions generally include a phone number, additional links, location information, etc. Adding more value to your ad can increase the chances of winning the ad auction.

Using the above three factors, Google forms the basis for your Ad Rank. 

Let’s take an example to understand how the auction works.

If a user is searching for digital marketing services, Google will check in AdWords advertisers pool and decide whether there will be an auction.

If four advertisers are bidding on the keyword that Google considers it is relevant to digital marketing services, an auction starts.

Now, Google will see the quality score and bid amount of each ad by using the following formula:

Ad rank = CPC (Cost-Per-Click) Bid × Quality Score

How Auction Works

Here, the advertiser ‘A’ has secured the first position; hence he will pay a lesser amount (actual CPC) than advertiser ‘B’. The advertiser ‘B’ has secured the second position; therefore, he will pay a lesser amount than advertiser ‘c’ and so on. Advertiser ‘D’ will pay the highest CPC as he has lost the auction.

Google ads (AdWords) can be a good investment in both time and money as you can see, Google Ads (AdWords) can help you increase clicks, conversions and it also helps to create user-relevant ads that drive the results you want.

So, what is your current ROI? Are your ads user-relevant? With our best PPC services, we guarantee you to increase your sales, leads, and ROI.

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1 comment

Webonix June 14, 2020 - 7:12 am

hey Saloni !
Great information on Google ads (AdWords). ThanK You for this Valuable Information.

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