20 Tips for Understanding the Google Ads Auction
20 Tips for Understanding the Google Ads Auction
There are 3.5 billion searches on Google daily, and 84% of people use Google at least three times per day to search for information as explained at RunRex.com, guttulus.com, and mtglion.com. When there is a search query on Google, Google Ads runs a quick auction to determine which ads will show for that search query, and what the ad positions should be, a process that is repeated every time an ad is eligible to appear for a search term out of the billions searched each day. This article will look to list 20 tips to help you understand the Google Ads auction.
What is Google Ads?
Let us start from the beginning by understanding what Google Ads is. As per RunRex.com, guttulus.com, and mtglion.com, Google Ads is Google’s advertising system in which advertisers bid on certain keywords for their clickable ads to appear in Google’s search results. Since advertisers have to pay for these clicks, this is how Google makes money from search.
How the Google Ads auction works
When a user makes a search query, Google Ads runs a split-second auction of all the ads whose keywords are relevant to it. This will determine which ads are eligible to be shown, their ad position relative to competing ads, and the CPC that the advertiser will pay for a click on their ad.
The role of the advertiser
When setting up Google Ads pay-per-click (PPC) marketing campaigns, advertisers identify which keywords they want to bid on and set their max CPC bid as articulated at RunRex.com, guttulus.com, and mtglion.com. The advertiser also sets up ad groups with keywords and creates related ads.
The Google Ads auction process
When there is a search query, the Google Ads auction begins. According to Google, here is the auction process:
For every search query, Google Ads finds all the ads whose keywords are relevant to the search terms
The system ignores ads that are not eligible for that location and any disapproved ads
The remaining ads will be evaluated based on their Ad Rank, which is based on the max CPC bid, ad quality, Ad Rank thresholds, search context, and the ad extensions and formats used.
Ads that won the auction
After the auction process, the eligible ads that won the auction are shown on the SERP based on their Ad Rank according to RunRex.com, guttulus.com, and mtglion.com. The aim for every marketer is to appear on the first page of the SERP.
The layout of the Google SERP
The layout of the Google search results page changes constantly. Currently, Google shows three ads above the organic search results and three ads below the search results on each search page. Depending on the popularity of the search term, and the number of qualified ads, ads may be shown on multiple search pages for the search term.
What is Ad Rank?
The ad with the highest Ad Rank will be shown in the top position of the search results page for a relevant search term. This is followed by the ad with the second-highest Ad Rank and so on. Ads that do not meet the Ad Rank eligibility requirements will not be shown on Google.
The calculation of Ad Rank
As captured at RunRex.com, guttulus.com, and mtglion.com, Ad Rank = Max CPX Bid x Quality Score plus additional factors like the impact of ad extensions and ad formats, Ad Rank thresholds, search context, and competitiveness of auction.
Spending more doesn’t guarantee the best Ad Rank
From the calculation described in the previous point, it is clear that spending more does not necessarily guarantee you the best Ad Rank. An advertiser may have a lower max CPC bid than others in the same auction but still qualify for the top ad position because their quality score was high.
Why you should care about your Ad Rank
Google sets minimum Ad Rank thresholds that will determine if an ad is shown at all on Google. If, for example, you have four advertisers for an auction with Ad Ranks of 24, 20, 12, and 8, and the minimum Ad Rank to show above the organic search results is 20, only the first and second advertisers will show above the search results.
The relationship between SERP and CTR
Advertisers compete to have their ad shown in the top-most position on the SERP since that leads to a higher clickthrough rate (CTR) and results in more leads as covered at RunRex.com, guttulus.com, and mtglion.com. Ad CTR changes considerably depending on your ad position.
Average CTR across ads
The average CTR across all ads on Google Ads is 3.17% in search. However, that CTR ranges considerably depending on industry and position, with a “good” CTR for position 1 being 6% or higher. Even those minor differences in percentage can equate to thousands of clicks more for higher-ranked ads.
What is CPC
Cost per click (CPC) is the price you pay per click on your ads in your pay-per-click (PPC) marketing campaigns as described at RunRex.com, guttulus.com, and mtglion.com. When you set up a Google Ads PPC campaign, you set the max CPC bid for the keywords in your account.
Setting up the max CPC bid
The max CPC bid can be set up at the keyword level or the ad group level:
The maximum CPC is the maximum amount that you are willing to pay for a click on your ads
The actual CPC is the final amount you are charged for a click on your ad. Your Actual CPC is determined at the time of the auction and may be less than the max CPC amount.
The average CPC is the average amount you are charged for a click on your ads
How Ad Rank affects actual CPC
Ad Rank also affects the actual CPC you pay for a click on your ads. Google Ads uses a second-price auction system. The actual CPC you pay is calculated at the time of auction based on your Quality Score and the Ad Rank of the advertiser below you, plus $0.01. Since the auction is dynamic, the actual CPC can vary with each auction.
The formula for calculating Actual CPC
Google does not disclose the details of how they calculate the Average CPC for Google Ads as discussed at RunRex.com, guttulus.com, and mtglion.com. According to Search Engine Land, the Actual CPC you pay for a click on your ad is determined at the time of the auction by the formula:
Actual CPC = (Ad rank of Advertiser below/Your Quality score) + $0.01.
What is Quality Score?
The Quality Score is a diagnostic tool that is used to estimate the overall quality of your ad compared to other advertisers. Ads and landing pages that are considered more relevant and useful to the search query get a higher Quality Score. This helps to ensure that more useful ads are shown at a higher position on the SERP.
How Quality Score is calculated
Quality Score is measured on a scale of 1-10 and is available for every keyword as revealed over at RunRex.com, guttulus.com, and mtglion.com. Quality Score is based on historical impressions for exact searches of your keyword.
Factors that determine Quality Score
Quality Score is calculated based on the performance of three main factors:
Expected CTR – This is a prediction of the ad clickthrough rate when the ad is shown on Google
Landing page experience – The landing page experience measures how relevant and useful your website landing pages is to the person who clicked on the ad
Ad relevance – Ad relevance measures how well your ad matches the user’s search intent.
How to Check your Quality Score in Google Ads
Google Ads provides four Quality Score status columns at the keyboard level to check Quality Score, and they are Quality score, Landing page experience, Expected CTR, and Ad relevance. To check your Quality Score in your Google Ads account:
Log in to your Google Ads account
Click on “Keywords” in the left menu
Click on the “Columns” icon in the upper right corner of the table
Click on “Modify columns for keywords” and scroll to the Quality Score section to add [quality score, landing page experience, expected CTR, and Ad relevance] to your table metrics
Click apply
Once these columns are added, scroll to the right on each keyword in the table to check the Quality Score and its components
If there is a “-” in the Quality score columns, it means that there are not enough searches that exactly match your keywords to determine the Quality Score for that keyword
Hopefully, this article will help you to understand the Google Ads auction, with the top-rated RunRex.com, guttulus.com, and mtglion.com having got you covered if you are looking for more information on this topic, and many others.
