Google Ads Auction
How do Google Ads Auctions Actually Work?
Once your ad campaign is set up, marketers choose a bidding strategy that controls how they pay for users to interact with their ads. The budget is the average amount the marketer is comfortable spending each day on their campaign.
Google uses a system call Ad Rank in which all advertisements on Google are ranked to determine the cost for each ad click. To have a higher rank with Google, your ads need to be relevant to users. Why is ranking relevant when it comes to auctions, you ask? Well, the higher-ranked advertisers get to save more money on auctions.
Google uses a system call Ad Rank in which all advertisements on Google are ranked to determine the cost for each ad click. To have a higher rank with Google, your ads need to be relevant to users. Why is ranking relevant when it comes to auctions, you ask? Well, the higher-ranked advertisers get to save more money on auctions.
Second-Price Auction
Second-price auctions allow higher-ranked advertisers to pay only $0.01 more than the amount of the next highest bidder. For example, if I am willing to pay $4 for a click, my competition is offering $3, and I am a high-ranking ad, I will only end up paying $3.01 for my ad to be shown first. Using this auction-style allows bidders their true maximum willingness to pay for a click but they only have to pay enough to beat the competition.Determining Ad Rank
We have covered how the ad with the highest Ad Rank gets to show in the top position, and the ad with the second-highest Ad Rank gets to show in the second position, and so on. But what exactly determines your Ad Rank? There are 5 main factors that influence your rank.- Bid
- Ad rank threshold
- Context of query
- Ad extensions impact
- Auction-time ad quality
Higher-quality ads typically lead to lower costs, better ad positions, and more advertising success.
Improving Quality Score on Ad Rank
To improve your quality score, Google recommends focusing on these 3 main areas: expected clickthrough rate (eCTR), ad relevance, and landing page experience.
eCTR
The expected clickthrough rate is defined as the likelihood that a consumer will click on the ad you've published. Methods to improve your eCTR are to (1) be specific, (2) experiment with different calls to action (CAT), (3) highlight the unique benefits of your product or service, and (4) include time- or location-specific text.
Ad Relevance
Ad relevance is defined as how closely your ad matches what the consumers searched. The next blog post will be heavily focused on this topic, but for now, here's a short summary on how to improve your ad relevance: (1) add negative words to prevent your ads from showing up on unwanted searches, (2) be specific on mobile, (3), target the right region for your business, and (4) include relevant search terms in your ad copy.
Landing Page Experience
One of the biggest factors influencing your Ad Rank is your landing page experience. Is the landing page relevant to the ad? Will the customer find the necessary information to continue with their search/purchase? To make sure your landing page experience is optimized, be sure you are (1) sending traffic to the right landing page (i.e. don't have a landing page on mountain bikes on a kids bike ad), (2) be consistent and make sure the landing page continues the "conversation" set up by your ad, (3) make your site transparent and trustworthy, (4) work on loading speed and clarity, and (5) make sure your site is optimized for mobile searches.
Links
Learn the fundamentals of Google Ads SearchUnderstand the Google Ads Auction
The 10 Most Important Google Ads Metrics
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