What Is Google AdWords? How the AdWords Auction Works
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What is Google AdWords
What is AdWords? Google AdWords is Google's advertising system in which advertisers bid on certain keywords in order for their clickable ads to appear in Google's search results. This infographic will help you understand how AdWords works, detailing the AdWords auction, bidding process and explaining important factors like Quality Score and cost-per-click. If you're asking "How does AdWords Work?" this infographic is for you!
Does AdWords Work?
Does Google AdWords work? Depending on the competitiveness of the keywords you're bidding for and the relevancy of that keyword to real conversions for your company, AdWords may or may not work for your business. For the most part, we've found that Google AdWords is extremely effective for any business, as long as they don't waste their money on the wrong keywords, or write bad ads. For examples of how Google AdWords can fail, there are plenty of bad eBay ads online.
How to advertise with Google AdWords
What is Google AdWords auction?
A Google AdWords auction is a tool that Google uses to determine the cost per click(CPC) amount that is required of an advertiser to pay when users click their ads.
What is Google AdWords auction?
How does AdWords bidding work?
When bidding for a keyword, your cost per click and ad position is relative to the quality score and maximum bid of competing bidders. The actual position of your ad is determined by your ad rank (Maximum bid times quality score) as the highest ad rank gets the 1st ad position. Your actual CPC will be determined by the ad rank of the next highest ad below you divided by your quality score. The only exception of this rule is when you are the only bidder or the lowest bid in the AdWords auction - you pay your maximum bid per click! AdWords bidding heavily penalizes advertisers who bid with low quality scores.
How many times does a Google auction run?
The auction gets run billions of times each month. The results are such that users find ads that are relevant to what they're looking for, advertisers connect with potential customers at lowest possible prices and Google rakes in billions of dollars in revenue.
How does a Google auction work?
Once a query is made on Google, the search engine processes the request and runs the auction which will then determine the ad's position, where it will appear and the CPC.
How do you enter a Google auction?
To enter the auction there is a bid requirement based on your keyword each time it is entered into an auction.
How can advertisers bid on Google auction?
Advertisers can bid in an auction based on keyword's ad positioning, with a higher positioning rate the better the keyword will perform in the auction and will build better eligibility.
What gets entered into a Google auction?
Once advertisers identity keywords they want to bid on, Google then enters the keyword from your account that it deems most relevant into the auction with the maximum bid you've specified as well as the associated ad.
What is average cost per click?
The average amount you spend each time a searcher click on your advertisement.
What is CPC?
Is the amount an advertiser pays based on the number of clicks their advertisement gets when it appears on a search engine page.
How does CPC work?
Is the cost paid by the advertiser after their advertisement is placed on a search engine page. This price is determined by the number of clicks that the advertisement receives.
What is a CPC bid?
Brings you the highest amount of clicks based on the budget of the advertising company.
How does CPC bidding work?
CPC bidding works based on the advertisements ad rank- as result of the maximum bid you specify for your keyword times the relevance and usefulness of your ad to its' user.
What is a CPC bid limit on Google AdWords?
Yes. You can only have one entry into any query auction from your account.
How many times can you bid on Google auctions?
There can only be one bid placed for each advertisement but the keywords will still be picked up for search engines based on the relevance of the keyword in relation to the user's search.
How does CPC advertising work?
CPC advertising is a form of advertising used by companies to increase the exposure of their products.
What is a Google auction quality score?
This is a metric to determine how relevant and useful your ad is to the user (components are CTR, relevance, and landing page). The higher your quality score, the better.
How does Google determine what you pay?
The price paid by the advertiser is determined by the amount of clicks that the company's advertisement receives.
What is Google ad rank?
Google ad rank is the position of the company's advertisement on the search engine page based on a combination of the company's maximum bid and quality score.
Ad rank vs. Quality score
The ad rank is more significant to an advertiser because it determines the how high on the page the advertisement will be displayed. Quality score on the other hand is determined by the relevance and usefulness to the searcher and is only a portion of the advertisement positioning process.As of 2013, Google's Quality score has become more and more valuable as the average quality score has changed from a 7 to 5.
Quality score vs. CPC
Quality score and CPC are important because they collective determine the positioning of the advertisement on the search engine results page.
What is ad position in AdWords?
Ad position is the position on the search engine page results where the advertisement appears in relation to all of the other advertisements.
How to check Google ad ranking
It is best utilize Google analytics to check your company's ad ranking or for a live report you can type in a general search for your product on Google.
CPC vs. Actual CPC
CPC is the advertiser's general cost per click depends on the maximum bid in regards to how many clicks the advertisement receives day to day. Actual CPC is different because it is determined by the actual rate per click which is usually less than CPC.
What is Actual CPC?
Actual CPC is the amount an advertiser pays each time a searcher clicks on their advertisement, this number is always lower than the maximum bidding price.
How does AdWords calculate Actual CPC
Actual CPC is determined by dividing the ad rank of the competitor below them (ad rank to hit) by quality score plus $.01.
What is Google's display network?
Google's display network features sponsored advertisements along with the general search engine results and provides demographic targeting.
What ads are on a Google display network?
Sponsored ads along with free advertisements appear on the Google display network although sponsored ads have more of a dominant presence. Google display networks also fully support all ad formats.
What are alternative bidding methods?
What is CPM bidding?
CPM bidding is based on impressions and can be used alongside CPC bidding.
CPC vs. CPM
CPC is the cost for an advertisement based on how many clicks it receives whereas CPM is the cost for an advertisement based on how many impressions it picks up. Both methods can be used simultaneously.
What is cost-per-acquisition bidding?
CPA is more specific for advertisers because it is the cost dependent on how many searchers purchase, subscribe etc to their product or service based on the online advertisement.
How does CPA work?
Once a user has clicked on your company's online advertisement the cost can then only be registered based on the user's action on the site. If the user purchases a product or subscribes to a series of services then the cost is applied to the advertisement.
How does CPA marketing work?
CPA marketing is marketing to a specific target group that is known to act on the advertisements presented to them.
CPC vs. CPA
When you use conversion optimizer and bid to a CPA, Google is determining your max CPC bids for you based on historical conversion data, and is attempting to hit either the average or max CPC you've set.
CPM vs. CPA
CPM and CPA go hand in hand because they are both based on impressions, only one is more specific than the other. With CPM impressions the user browses the site and clicks on links within the site, with CPA rather, the user then takes that next step and subscribes to the product. Both methods are used to fine tune the target group.
What are keywords?
Keywords are a general concept or purpose complied into a few words that are specific to a particular company. These keywords are then used by companies to target groups that would be interested in their products.
How do keywords work?
When a searcher is looking for a product typically the general search is for ‘running shoes' instead of ‘Nike Women's Air Max,' since this is the case search engine are given preset keywords by the advertiser and the search engine then uses these words to decipher whether or not to display your advertisement based on relevance.
How does a keyword search work?
In a keyword search the search engine separates advertisements and will rank particular advertisements based on how accurately it applies to the searcher. The algorithm is programmed to process requests to searchers based on keywords.
How does Google determine search results?
Google determines search results based on keywords used by advertisers as well their CPC and ad ranking in relation to the requested search by the user.
How to get your Google ranking up?
To increase Google ranking it is vital that your company make advertisements and content that is search engine friendly. Search engines pick up sites based on specific words or phrases- the best way to stay on the search engine radar is through search engine optimization.
What is search engine optimization?
Search engine optimization is the act of improving the visibility of your site or page within a search engine results page through natural searches. This can be done by honing in on keywords within the context of your content so that a search engine can find and display your site faster and with more accuracy.
How does SEO work?
SEO tactics hone in on keywords within the context of your content so that a search engine can find and display your site faster and with more accuracy.
Google display network vs. Google auction?
The ad auction works very similarly, but is triggered by "placements" or pages on Google AdSense where publishers made advertising space available.
What is an ad group in Google AdWords?
An ad group is a series of keywords, ads, and bids that are an essential part of how a Google AdWords account is organized.
How do ad groups work?
An ad group consists of one or a few advertisements, keywords, placements, or other methods used by advertisers to target their product market. It is beneficial to create individual ad groups for individual products.
What is ad relevance in AdWords?
Ad relevance is a keyword status that measures how related your used keyword is to your advertisements as well as how such keywords match the message of your ads.
What is a conversion optimizer in AdWords?
Guarantees that your advertisements are displayed more frequently in situations where you are likely to gain more conversions.
How does a conversion optimizer work?
The objective of a conversion optimizer is to get you the most conversions per product therefore the conversion optimizer uses algorithms to anticipate which clicks will most likely benefit you- all in real time.
How does conversion optimizer determine CPC?
A conversion optimizer determines a higher CPC bid for more valuable clicks and a lower CPC for clicks with little traffic. This information is abstracted from data recorded in previous ad conversions or your ad's history.
I advertise on Google. How am I doing?
At WordStream, we've analyzed tens of thousands of Google AdWords accounts from all over the world, in all sorts of industries. The easiest way to see how you're doing at Google PPC is to benchmark your PPC performance to your industry and spend range. Thankfully, WordStream's got a free tool for that. Click below to give our Google AdWords Grader a free run!