What is Google Adwords and How Google Ads Work

Saloni Pimple, Associate Manager – SEO at Infidigit, Mumbai, is a passionate SEO professional specializing in technical SEO, content optimization, and data-driven analysis. Committed to staying updated on SEO trends for delivering exceptional results and contributing to organizational growth. In

What is Google Adwords and How Google Ads Work

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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 the 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 are, 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.

    What is Ad Rank?

    Various brands today use Google Ads to gain new and retain existing users. While these ads are pay-per-click ads, many factors determine the impressions, positions, and ad clicks. 

    In simple terms, Ad rank is Google’s auction system where the advertiser places a bid in the AdWords system to secure a specific ad position. A lot also depends on price bids by other competitors or advertisers. However, the maximum bid multiplied by the quality score determines the actual ad position.

    Eventually, the advertiser with the highest Google Ad Rank gets the top position rather than the highest bidder. Hence, having a good Ad Rank is critical to get more impressions and clicks effectively.

    However, it is important to note that Google doesn’t clarify how the quality score is calculated and what factors would affect the Ad Rank.

    How Does Google AdWords Charge?

    Once you have a basic understanding of what Google AdWords is, you need to focus on how Google AdWords work.

    • Keyword Competition 

    One of the main factors that drive Google AdWords charges is based on what keywords you target. A lot depends on the competition and what other advertisers are willing to pay. Hence, the keywords you choose must strike a good balance between being effective and reasonable in terms of budget. 

    • Maximum Bid and Bid Position

    While you get ranked higher when you bid higher, you can quickly run into budget issues. Hence, it is essential to have a strategy that allows you to bid sensibly and strategically to secure the right bid position. 

    • Average Monthly Budget

    You must also get the results within the set budget for the Google AdWords campaign.

    • Click-through Rates

    The click-through rates of your ad can also impact the total cost of a Google AdWords campaign. When you have keywords with higher click-through rates, Google rewards you with a lower cost per click.

    • Keyword Quality Score

    Having the right keywords in your ads can lead to higher click-through rates, and when you have a good keyword quality score, Google would charge you lower click costs which would impact your Google AdWords campaign budget.

    Hence, a lot of insight and strategy goes into managing your AdWords cost. Ideally, you should start with a small budget to understand how Google Ads works in a real-world scenario.

    Benefits of Google AdWords to Ecommerce Businesses 

    Google AdWords makes it easy for e-commerce businesses to reach their potential customers. Let’s dive into the top three benefits of Google AdWords to your ecommerce business.

    • It is faster than SEO

    SEO is indeed great, although not all business owners have the time to do it. Therefore, consider launching PPC ads to see the immediate results.

    • Attracts Larger Business Audience

    Another great thing about search engine advertising is that you really can reach many people. When a brand starts out, one of the biggest problems is getting people to know about it. But with Google ads, it is easy to reach a large audience with minimum cost.

    • Outrank Competitors in Market

    Are you trying to find traffic for your website? Try digital advertising. You should understand that the influential ad platform will let you pay for a place at the top of SERPs for specific keywords, attracting traffic to your website.

    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 appears 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 the user is searching for, plus the keyword for which the ad is optimized.
    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 optimized for. Let’s say the ad keyword is “Digital Marketing Agency”, then Google will select websites that have 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

    What are Google Ad Networks?

    Google Ad Networks are all the places where your ad can appear including Google sites, partnered websites, and mobile ad placements. You can choose from the various types of Google ads campaigns based on your goal and advertise yourself. This ad network is divided into two sections – the search network and the display network. 

    In the search network, you bid on keywords relevant to your business, products, or services. Your ad gets displayed whenever a user searches for the keyword as a part of the search results. 

    In the Display networks, Google displays your ads as banner advertisements on the Google partnered websites.

    What is Ad Rank?

    Google ads work on a bid system like a live auction, where you bid in the Adwords system to secure your position. It is a value that determines the position of your ad. Your ad gets ranked depending on the competition, the bid amount, and the Quality Score.

    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.

    How do you enter a Google Auction?

    When you bid for relevant keywords that the user searches for, you become eligible for entering in Google Auctions. The more relevant your keywords, landing pages, and ad texts are, the better is your Quality Score and the better are your chances of getting a higher ranking on search engine pages. Google also helps you in finding relevant keywords through its Google AdWords keyword tool– Keyword Planner.

    This auction runs billions of times every month making your business visible to users who are searching for keywords that you bid for.  

    Google Ads Best Practises

    If you are trying to use Google Ads for your ecommerce business, implement the below practises for best results.

    • Make use of the PPC Planning Template 

    Investing in a PCC planning template will assure you with ad placement SERPs. Besides, your ad placement can enhance your lead in the market. You ensure that your ads tool is properly joined with your CRM. It would be best to consider leveraging your ads data to ensure the leads are nurtured throughout the buyer’s journey. 

    • Avoid Broad Keywords 

    If the key phrase is in the query, your ad can be revoked even if it’s in a different context. This is called a broad match. You can’t get people to click on your ads if your ads don’t match what people are looking for. This means you’ll have to pay more for each click.

    • Run Relevant Ads 

    As a marketer, you should know how to set up the right targeted advertising for your digital projects. There isn’t a lack of digital ad platforms or opportunities for ad targeting. The problem is knowing how to use the tools available to make a strategy that works. It would be best to focus on learning to use the appropriate tools. 

    • Improve your Quality Score

    If you want to boost your ads, landing pages, and keywords, you can use Quality Score to help you figure out what needs to be done to do that. It’s better to think of a score as a general guide for improving ad quality instead of a score that needs to be changed. 

    • Optimise Landing Page 

    Landing page optimization is the process of improving or enhancing each part of your landing page to get more people to click on it and buy from you, resulting in customer traffic. Data and unverifiable evidence are used instead of just a hunch to make changes to the whole page.

    How does Google Adwords charge?

    Google Ads works on a pay-per-click program, which means that your ad is displayed for free and you are charged when someone clicks on your ad displayed at the SERPs. The per-click price is determined by the amount of competition and the competitor’s willingness to pay. When Google Adwords are managed properly they can fetch you good results and if not, they can cost huge amounts of money spent on nothing or low-quality traffic.

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    7 thoughts on “What is Google Adwords and How Google Ads Work”

    1. Such an impressive blog on Google Ads beautifully explained its types and the way it works. Going through this blog was definitely a great help

    2. Amazing article…This is a very useful blog for many people who wants to learn Google AdWords. I like your blog, it is well detailed and easy to understand about google AdWords. You cover all the possible topics in this blog.

    3. This article is very informative, updated and transparent.
      What a useful information provided by this blog! It’s remarkable. Thanks for helping me out

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    What is Google Adwords and How Google Ads Work