Google Ads: What Are Google Ads & How Do They Work?

Every second, there are 2.3 million searches performed on Google, and the majority of search results pages include Google ads. Paid for by businesses, Google ads can be an extremely effective way of driving relevant, qualified traffic to your website exactly when people are searching for the types of products or services your business offers.

In this article, you’ll learn what Google ads are, how Google ads work, and why you should run your own Google ads.

What Are Google Ads?

Google offers advertisements which appear in search results on google.com with the use of Google AdWords or advertisements that appear on other websites through the Display Network and Google’s AdSense program.

Below is an example of a Google search engine results page (SERP). There are two sections of paid Google ads, one above the "natural" or organic links and one at the bottom of the results page:

The sponsored results, or ads, (in the red box) are denoted with a green “Ad” label. The results that appear below the ads (in the green box) are referred to as organic results.

Google also offers Display Ads, which appear on the Google Display Network. The Display Network is an extensive collection of outside, third-party websites that have partnered with Google and agreed to serve Google ads. Google ads on the Display Network can be in text, image, video, or rich media format, and can be targeted differently. This includes remarketing and banner ads.

If using AdSense, your ads would appear in the selected areas on a website:

Why Google Ads Appear

The Google AdWords auction is focused around keywords – advertisers choose a list of keywords to target that are relevant to their business offerings, the words that people are most likely to use when searching for their product. They then bid on these keywords, basing each bid on how much they are willing to pay for a Google user to click on their ad. This bid, combined with a Quality Score assigned by Google based on the quality of your proposed ad, determines which Google ads appear on the SERP. When users click the ads, the advertiser pays a certain cost (the cost per click, or CPC), which is calculated according to the below formula:

This is where the term Pay-Per-Click (PPC) originates.

The AdWords Auction

AdWords works on an auction system, which takes place every time a user performs a keyword search.

To “win” the AdWords auctions and see your Google advertisement appear for relevant keywords, you’ll need to optimize your Quality Score and bid amount. The higher your Quality Score, in conjunction with your bid amount, the better your ad positioning. The following factors (among others) affect your Quality Score:

  • The relevance of your Google ad to the search query
  • The relevance of the Google keyword to your ad group
  • The relevance of your ad to its landing page
  • The historical click-through rate (CTR) of the ad and its ad group
  • Overall historical account performance

There are also overall benefits to having a high quality score:

  • Lower costs– Google rewards advertisers with high Quality Scores by lowering their cost per click (CPC), helping improve ROI.
  • Higher exposure – When you have high Quality Scores, your ads will display more often, in better positions on the SERP—the top vs. the bottom of the page. This enables you to get more clicks and conversions without having to raise your bids.

For more information, refer to this infographic to better understand how the AdWords auction works.  

Google Ads Costs

The cost of Google ads varies based on a number of factors, including the competitiveness of your keywords and industry, your geographic location, the quality of your advertising campaigns and more.

In the US, the average cost per click for Google search ads across all industries is $2.32:

In other countries, average costs for Google ads are often much lower:

Advertise on Google with WordStream

Could Google ads be right for your business? Most likely, yes. In 2013, 1.5 million businesses generated $111 billion in revenue from Google’s search and advertising tools. Advertising on google can be extremely beneficial for any company with the right strategy. 

Google AdWords has a multitude of advertising options and can be complicated. Many advertisers struggle with the commitment necessary to achieve success through paid search or display advertising. That’s why WordStream’s software and free tools have proven invaluable to thousands of businesses advertising on Google.

The AdWords Performance Grader: A Completely Free Audit of Your AdWords Account

To maximize the impact of your AdWords ads and campaigns, you need to know which campaigns work for your business and where to make improvements–-WordStream’s  AdWords Performance Grader can help you do exactly that.

 

The AdWords Performance Grader is the most comprehensive free tool of its kind. In 60 seconds or less, the AdWords Performance Grader performs a thorough audit of your AdWords account, identifying areas in which improvements can be made as well as highlighting successful areas of your account and how they compare to competitive benchmarks for your industry.

 

Try the WordStream AdWords Performance Grader for free today.

WordStream Advisor: The Only Online Advertising Platform You Need

Constant analysis, optimization, and attention are required to make advertising on Google as profitable as possible. However, for many small businesses and companies with limited resources, managing a paid search campaign on AdWords can be a full-time job. That’s why we developed WordStream Advisor.

Our proprietary 20-Minute Work Week system allows you to effortlessly identify areas in which action can be taken to improve results and campaign performance immediately. WordStream Advisor allows you to manage your Google AdWords, Bing Ads, and Facebook advertising campaigns from one responsive, centralized dashboard, eliminating the need to track various campaigns through different interfaces – simply log into WordStream Advisor and take control of your online advertising efforts from one place.

WordStream Advisor customizes its recommendations based on your current campaigns, account history, and other elements individualized to your AdWords account. You will receive action items with specific, actionable recommendations and prescriptive workflows allowing you to make changes to your account in mere minutes that will have an immediate and powerful impact on your account performance. You can track changes over time, and see improvements in your account with our intuitive visual reports.

Try WordStream Advisor today with a free, no-obligation trial and see how we can help you succeed with advertising on Google.

 

AdWords Features