Search engines have been a part of our daily lives for decades. However, do you know what goes on behind the scenes when you search for the best pizza place in your neighborhood, or top sports camps in your area for the summer?
Each query you type into Google triggers a unique auction
Businesses with a savvy Google Ads strategy don’t just bid blindly; they carefully select high-value keywords to trigger their ads. Like any marketplace, keywords with more competition naturally command a higher price.
How the bidding works: If you set a “Max Bid” of $10.00 for the phrase “top hotel near me,” you are telling Google the absolute most you’re willing to pay for a single click. However, Google’s auction is surprisingly fair: you often pay just $0.01 more than the next highest bidder. If the runner-up bids $7.00, you only pay $7.01 to secure your spot.
To keep costs predictable, you set a Daily Budget. Once your limit is reached, Google pauses your ads until the following day, ensuring you never spend more than you’ve planned.
Factors that will impact whether or not your ad is seen
Whether or not your ad will be shown depends on your Ad Rank.
Unlike a typical auction where the person with the most money always wins, Google uses a formula called Ad Rank. This is based on two factors:
- Your Bid ($): The maximum amount you are willing to pay if someone clicks your ad.
- Quality Score (★): A 1-to-10 rating of how helpful your ad actually is. Google looks at your website’s speed, how well your ad matches the search, and if people usually find your ad useful.
The Secret Formula:
Ad Rank=Maximum Bid×Quality Score
Because of this formula, a local pizza shop with a great website and a $2 bid can actually beat a massive chain with a bad website and a $10 bid. Google would rather show a helpful ad for less money than a bad ad for more money.
Why run Google Ads?
Unlike more traditional forms of advertising like TV or radio ads, you only pay when someone clicks on your ad! With the right strategy, your business will connect you with people who are already looking for you, so that every dollar you spend on marketing increases the number of high-quality traffic that is driven to your website.
In addition to this, you will have access to data, such as which keywords drove the most traffic, which region showed the most interest in your ads, allowing you to continuously refine your strategy for optimal effectiveness.