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Google Ads Tutorials: How the Search ad auction works

Google Ads Tutorials: How the Search ad auction works


[light music] Once you know where your ads will
appear on Google, it’s helpful to understand how the Google Ads auction work. Every time someone does a Google
search the Google Ads auction decides which ads to show and in what order. Let’s explain the ad auction through an example. Imagine four advertisers are competing
for space in the search results page. Each one has indicated how much
they’re willing to pay for someone to click their ad and visit their website. Advertiser A bids $4, advertiser B bids $3, advertiser C bids $2, and advertiser D bids $1. You might think that the highest bid of
$4 would automatically win this auction. But, a high bid does not guarantee
that people searching on Google see the ad most relevant to their search. Imagine if bids were the only
consideration in auctions. Then you might see an ad for shoes
triggered by a search for insurance. In order to provide the best user experience,
the ad auction considers three main factors: Your bid, the quality of your ad, and the expected impact of ad extensions. Let’s start with your bid. This tells Google Ads the maximum amount
that you’re willing to pay for a click on your ad. The second factor is the quality of your ads. This is called Quality Score and refers to
the relevance and usefulness of both your ad and the website it links to. An ad’s Quality Score includes three components. First, the expected clickthrough
rate, or expected CTR. This is a prediction of how often your
ad will be clicked on when shown, based on historical performance data that
Google has for every search query. Second, your ad’s relevance. The language of your ad is analyzed
to verify that it matches the keyword. And third, your landing page experience. An ad is only useful to the people clicking it,
if it helps them find what they’re looking for. A good landing page should
have relevant and original content, be easy to navigate, and be transparent about
the nature of your business and how you plan to utilize
a user’s personal information. You can monitor your keywords Quality
Score in your Google Ads account, and increase the score by
improving your clickthrough rate, ad relevance, and landing page experience. The last factor the ad auction
considers is the expected impact from your ad extensions and other ad formats. When creating your ad, you have the option to
include additional information to your ad, such as a phone number, or links
to specific pages on your site. These are called ad extensions. The system estimates how the
extensions and other ad formats you use will impact your ad’s performance. These three factors impact how
your ad ranks in the auction. Imagine that advertiser A’s quality score is low, advertisers B’s and C’s are high, and D’s is medium. For ad extensions impact,
let’s say that advertiser A has no extensions, so they have no extensions impact. Advertiser B is only eligible for one extension,
so they have a low extensions impact. Advertiser C is eligible for many extensions,
so they have high extensions impact. And advertiser D has a medium impact. The system uses these three
components to calculate the Ad Rank. In this example, advertiser A’s
Ad Rank is calculated as 5, advertiser B’s Ad Rank
is calculated as 15, advertiser C’s is 20 and advertiser D’s is 8. This Ad Rank score determines the ad
position in the Search’s page results. So, in what order will the ads appear? Since advertiser C has the highest
rank, their ad will show first. Advertiser B will appear second. Advertiser D will appear third, and advertiser
A might not enter the auction at all, since their Ad Rank is too low. Now that you understand how the ads are ranked, how much will these advertisers
actually pay for a click? They’ll pay the minimum amount necessary to
maintain their position in the Search results. Let’s take a look at advertiser C. They’ll only pay the amount required
to maintain their first position. Even though they’re willing
to pay $2, they might only pay $1.73. Similarly, advertiser B won’t necessarily pay $3, but just enough to outrank
advertiser D in the auction. It’s important to note that you can impact
your position and your cost-per-click. To improve your position, try raising your bid. Keep in mind that not every bid raise
will lead to an improved position, since Ad Rank also considers
Quality Score and ad extensions. To help you decrease your cost-per-click, you can
improve your ad quality or include ad extensions. These improvements can improve
your ad clickthrough rate, and reduce your cost-per-click. Now that you know how the auction works, it’s time to start organizing your account
and understanding account hierarchy. [music continues]

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