The Basics Of How Google AdWords Works

For those unfamiliar with what google AdWords does this blog post is for you.  Essentially Google AdWords is a way to advertise online on over a million websites.  Traditional forms of advertising such as newspaper, flyers and mail lack what AdWords gives you.  AdWords gives the user the ability to change to ad at anytime, remove it at any time, view progress reports of who sees the ad and directly reach people searching for the service or good they provide.  This blog will focus on how Ads are ranked and chosen on the Google search engine page.

photo credit: cambodia4kidsorg via photopin cc

photo credit: cambodia4kidsorg via photopin cc

When someone searches for something on Google they are interested in, lets say they searched for running shoes,  instantly any ad with “running shoes” as a keyword will be selected, ranked and displayed on either the top, side or bottom of the page.  The ranking system is based on 3 main contributions.  Cost-per-click or Bid, Ad Format and Quality.  All these together are called an Ad Rank.  The ad with the highest Ad Rank will be shown at the top of the list.  This method is used because Google wants to show the most useful ads in the higher positions and to prevent companies from just buying the ad space.

Cost-per-click or your bid amount is the amount you’re willing pay every time someone clicks on your ad.  You are only charged when someone clicks on your ad and not just for it appearing on a page.  The maximum-CPC is the maximum amount you are willing to pay per click.  However, often times due to the fact that you only have to pay the amount to beat the competition of the second highest ad below you this will not be the amount you pay.  The actual-CPC is the minimum amount you have to pay to keep your ad spot.  Since this is a part of Ad Rank as a whole if the ad below you has a much lower ad rank yours, your actual-CPC will continue to get lower and save you even more money!

Although the highest bidder will get more points towards their Ad Rank this does not necessarily mean they will get the top spot.  The quality of your ad is a major part of the Ad Rank.  This means that when someone clicks on your ad the landing page it takes them to is useful and has what they are interested in, the page is easy to use and provides users with what they are looking for.  Also a factor in quality is the expected amount of clicks it will receive.  If the page is expected to get lots of clicks this will boost the Ad Rank points and make it a higher quality ad.  So the more people click on your ad the higher the rank will raise.  Your ad relevance will contribute to the quality aspect too, the more relevant your ad is to what the users are looking for the higher up it will move.

Ad formatting is the third major part of the Ad Rank system.  Ads that are formatted better with more useful information such as a phone number, links and domain names will give the browsers more reason to click on your ad helping your Ad Rank raise.

Google uses all of the factors to create the Ad Rank which determines the placement of your ad.  The best ads will be in the “Top placement” position meaning they will be shown at the top of the page on every page.  The ads that are lower ranking with be shown on the side or bottom, referred to as “Other placement” which usually will only be on one of the pages and not continue like the “Top placement” ad does.

Using google AdWords to advertise on google gives you the opportunity to change your ad at any time, directly reach those interested in exactly what you are offering and reach millions of users everyday.

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