Series: Google AdWords 101 – How AdWords Works

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Google AdWords 101 - Where Ads AppearLet’s understand how AdWords Works…. Each and every time a search is done a new Ad Auction tales place. This can happen millions of times a day.

Ad Auctions take place on search pages but also on Display Network Pages (different AdWords networks explained). Following some key tips and tricks will help improve Quality Score and lower costs.

What’s this “Ad Auction” you speak of?

The Ad Auction is the concept that determines the way all of Google’s AdWords are displayed on a search or display network page.  Competing with different people, you have a chance to show up in different rankings and different ads get triggered. In the AdWords auction, your ad’s position is determined by your Quality Score x Your CPC (bid).

A very important thing to note here is that just because you are willing to spend the most that does not mean that you are guaranteed the top position. Ad Position equals your quality score multiplied by your bid. Things that come into the consideration when figuring out your quality score are the following: Clickthrough Rate, Keyword Relevance, Ad Relevance and Historical Performance.

Google AdWords 101 - how google ranks ads

I want to be in position #1, right?

That’s what we hear from everyone, “I want to be in the first position”. We feel though that this is not necessarily the best. It is important to look at your performance stats and determine the position that brings you the best return on investment and helps you best reach your goals.

Going out of your way to make sure your bids are high enough to put you in the top position is not recommended for clients with limited budgets (everyone has a limit).  Instead, set your bids at competitive levels and be sure to work on improving Quality Score to help boost your Ad Rank above your competitors.

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