Most of the new beginner and newly started businesses wonder how google ads work so before we identify the cost lest understand how it works. Understanding how google ads work will give you a brief idea of how the auction process world will be beneficial when it comes to creating the budget for your campaign.
Businesses and individuals that are not aware of google ads often think that the advertiser and market with more money have more influence and get better results. Undoubtedly the more budget you have the longer you will survive in the race but businesses should think about the return. If you are spending $1000 to get 500 new clicks but your competitor spends $1500 or more to get 500 customers then your ad is performing much better than your competitors.
Google ads are all about how smart you are able to select the right keyword and able to rank for that keyword on the top in SERP with less bidding amount. So let’s take a look at a few factors that determine how the ad works
Google Ads Auction
The google ad auction functioning is very much related to the normal auction. So this auction begins, whenever a user types a keyword or query in the search box and hits the enter button google records the term user is using to look for their answer. Next google matches the query with the keyword advertisers and markets are bidding on. So if the user query matches the keyword used by advertisers, then the auction begins because google or any other search engine does show ads for every keyword until and unless they determine that the query is already being used by the user.
In the auction, ad placement and CPC (cost per click) is determined by an AD Rank. The ad rank is depending on two important factors: the maximum bid for the keyword you are targeting and the ad quality score. So let’s understand what is Ad rank?
Ad Rank
From the term, you can analyze that ad rank refers to the position that your ad gets for a particular keyword on the search result page. If your ad is getting shown up in the second position or in the third position then your ad rank is 2 and 3 respectively. So before assigning the rank in the paid result section google calculates each ad’s “Ad rank”. So the Ad rank is totally dependent on two factors: the maximum bid and quality score.
Maximum Bid:
The maximum bid is the amount advertiser and marketer are willing to pay for each click. So when a user searches for a particular term and if your ad is getting displayed on the search engine result page then you pay some amount to google whenever a user clicks on your ads. The maximum CPC bid amount can either be assigned to the group of keywords or to an individual keyword. Remember the maximum bid amount matters when it comes to Ad rank.
Read More: Google Advertising: How Much Does Google Ads Cost?
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