{"id":4002,"date":"2021-06-17T17:49:08","date_gmt":"2021-06-17T17:49:08","guid":{"rendered":"https:\/\/vendlab.com\/?p=4002"},"modified":"2022-01-01T20:18:09","modified_gmt":"2022-01-01T20:18:09","slug":"how-google-ads-work","status":"publish","type":"post","link":"https:\/\/vendlab.com\/how-google-ads-work\/","title":{"rendered":"How Google Ads Work"},"content":{"rendered":"

To place an advert, an advertiser specifies a list of keywords (or sometimes landing pages or products) for which they want the advert to appear, the advert’s content and the price they are willing to pay for a click. Google displays a list of adverts next to the natural search results triggered by keywords in the search query when a user searches. The adverts’ order is decided by the cost per click the advertiser is willing to pay and the advert’s historical performance.<\/p>

For example, imagine an online retailer wants to advertise its range of digital cameras. They create an advert triggered by the key phrase ‘Canon digital camera’. A user then uses Google to search for the phrase ‘buy Canon digital camera’. As the search phrase contains the specified keywords, the advert is displayed. If a user clicks on the advert, the retailer is charged. If not, there will be no cost.<\/p>

Calculation of Cost-Per-Click<\/a><\/h2>

When deciding what to charge advertisers, Google uses an auction-style bidding process to set prices. For any two adverts of the same quality score (see below), Google will award the higher position to the ad with the highest bid. However, the winning bidder will pay only slightly more than the loser.<\/p>

For example, suppose there are three ad slots available and four advertisers competing for those positions. The table below shows each advertiser’s maximum bid and what amount they end up paying if their ad is clicked:<\/p>

Advertiser<\/td>Position<\/td>Max Bid<\/td>Amount Paid<\/td><\/tr><\/thead>
Ad 1<\/td>1<\/td>\u00a34<\/td>\u00a33.01<\/td><\/tr>
Ad 2<\/td>2<\/td>\u00a33<\/td>\u00a32.01<\/td><\/tr>
Ad 3<\/td>3<\/td>\u00a32<\/td>\u00a31.01<\/td><\/tr>
Ad 4<\/td>4<\/td>\u00a31<\/td>Ad not shown.<\/td><\/tr><\/tbody><\/table><\/figure>

How Ads are Ranked<\/a><\/h2>

Google displays Paid Search results in order, just like organic search results. The position of an ad has a significant impact on traffic. To decide the relative positioning of ads, Google has devised a score call Ad Rank<\/em>. The higher an ad scores, the better its position. Ad rank is decided by:<\/p>