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

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

Every second, there are billions of searches performed on Google, and the majority of search results pages include Google ads. Paid for by businesses, Google Ads is an 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.

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What are Google Ads?

Google Ads is the name of Google’s pay-per-click (PPC) platform, which allows businesses to gain visibility across Google’s properties. The most common type of Google Ads ad is the search ad, which appears on the search engine results page (SERP) for searches relevant to the advertiser’s products and services—but businesses also use Google Ads to run display ads, shopping ads, YouTube ads, and more.

Google search ads

Below is an example of a Google SERP containing ads. There are two sections of paid results: one above the nonpaid or organic results, and one below.

what are google ads - paid vs organic results on the serp

Google display ads

As mentioned above, you can also run display campaigns which appear on the Google Display Network—an extensive collection of outside, third-party websites that have agreed to serve Google ads. Google Display ads can be in text, image, video, or rich media format, and can be targeted differently—such as through audiences and remarketing

google display advertising example - mailchimp display ad

Google shopping ads

Google shopping ads appear on both the regular SERP and in the shopping tab. These ads operate differently from regular search ads since you can’t target keywords. Instead, you maintain a detailed catalog of your products and Google will match them to searches. You can, however, tell Google which keywords you don’t want your ads to appear for.

what are google ads - example of google shopping ad

YouTube ads

Since Google owns it, YouTube advertising is done through Google Ads. You can create video, text, or display ads that appear during and before videos and elsewhere on the platform. YouTube ad targeting operates similarly to display targeting.

skippable youtube ad example

Why Google Ads appear on the SERP

Google Ads is focused around keywords, the words that people are most likely to use when searching for their product. When advertisers create a Google Ads search campaign, they create ad with a specific offer and choose a list of keywords to target that are relevant to the offer. When someone searches on Google (also known as a query), Google will check to see if any advertisers are bidding on keywords relevant to that search. If there are, ads will appear on that SERP.

How does Google decide which ads to show? Enter: the Google Ads auction.

how does google ads work - infographic of google ads auction

View the full auction infographic here.

We explain, in full, how the Google Ads auction works here, but we’ll pare it down for a quick version. If, when someone searches on Google, advertisers are bidding on keywords relevant to the query, Google will enter all keywords into the auction that it deems relevant—one per account.

It will first give each keyword a Quality Score from 1-10, based on its relevance to the query and other factors. Then, it will give each keyword an Ad Rank score by multiplying its Quality Score by the corresponding advertiser’s maximum bid. The ads with the highest Ad Rank scores are the ones that show.

what is ppc - how the google ads auction works

To “win” the Google Ads 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 Google Ads auction works.

📗 Free guide >> Hacking Google Ads: One Weird Trick That Could Save You Thousands

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.

average cost of google ads

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.

The Google Ads Performance Grader: A completely free audit of your Google Ads account

There you have it! Google Ads, explained.

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

wordstream google ads grader report example - impression share tab

The Google Ads Performance Grader is the most comprehensive free tool of its kind. In 60 seconds or less, the Google Ads Performance Grader performs a thorough audit of your Google Ads 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 Google Ads Performance Grader for free today.

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