How Do Google Ads Work

How do google ads work

Starting out of a garage in Menlo Park California, Google has grown into one of the largest and most successful companies in the world.

Google dominates the online world, with an average of five billion searches per day in 2018, it’s easy to see how this tech giant is an all-encompassing platform.

From humble beginnings to the undisputed industry giant, Google has changed how we use the internet.

Not only has Google altered the way we gather and search for information, it has also forever changed how companies market their products, now has a platform that reaches billions of daily users.

How do Google ads work: Background

How do Google ads work: Background

According to Google’s Q4 2018 annual report, across the total Google network, they generated $28 billion (£21.4 billion) in ad revenue.

In 2018 this accounted for 70.9% of Google’s entire revenue stream.

This company is heavily relying on ad revenue to support their business, and remember that this is not just the search engine ads, this is spread across its entire network of websites and services.

The most surefire way to make sure that your ad is seen is to put it on Google.

When compared with other digital marketing platforms, the pure scale of Google daily user base puts it on a different level.

Getting your ads to the front page of Google can give your brand or business an immense amount of exposure.

This isn’t breaking news, and lots of companies and especially small brands have amplified their Google ad presence as one of their top priorities.

That is why it’s so important to understand what goes behind getting your ad to the top of Google’s list.

When understanding how Google chooses top advertisements, its best to think of the situation as an online auction.

First off there are three main components to the Google ad auctions, the CPC bid, the quality score and finally the ad ranking.

CPC Bid

The CPC bid is how much you are willing to pay Google in the initial bid for the keyword that has been selected.

Every time someone does a search in Google they enter a set of keywords; when a keyword that you find relevant to your business is typed in the search box, the advertisement you made gets automatically thrown into a Google auction.

Your bid is ranked against other ads that are in the auction for the same keyword, now the key point is that yes, having a higher bid can increase your chance that your ad will come up at the top of the page; but it is not the only factor that affects your chance of winning the bid.

Quality Score

The quality score is the wildcard in the Google advertising deck.

Google uses the measurement to better target advertisements and ensures ads that have the most relevance and quality, are not pushed out by people who can just funnel the most money in.

Now some may be asking how Google comes up with the quality score. Google uses five key points to rank your quality score:

  • Your click-through rate
  • The relevance of each keyword to its ad group
  • Landing page quality and relevance
  • The relevance of your ad text
  • Your previous Google ads account performance

As one can see this score is used to ensure that the ads you are putting in the keyword bidding war are relevant to what the individual is searching.

Now if you plug these previously mentioned variables into Google’s formula, you can see how your ad ranks in the algorithm.

Your CPC bid x your quality score is going to give you your ad ranking, and as I am sure you have assumed already, the ad with the highest ad ranking gets put first.

Cost per click formula   

Now, the bid you put in to get your ad ranked in Google is basically there just to get you in the door.

Google makes its real money by the cost per click, how much you as a business is paying Google every time someone clicks on your ad.

The way you find this out is through Google cost per click formula, they use the ad rank of your competitors and your quality score to see how you rank and then charge you accordingly.

The formula looks like this:

CPC = ad rank of the person below you / your quality score + $0.01

Let’s run through an example, say the ad rank of the person below you is 15, and your quality score is a 7.

You would divide 15 by 7, add the .01 and end up with 2.15, this means you would pay Google $2.15 (£1.65) every time someone clicks on your ad.

The reason that they do this is so companies with tonnes of capital can swoop in and swamp the system with mediocre ads that just get paid to be at the top of the list, there has to be a little more strategy for your ad to get on the top of the page.

Is all of this worth it, you may be asking right now. Well, the quick and simple is yes, definitely.

The way that Google has designed its ad system is quite ingenious. This system allows for companies and brands that may not have the capital to throw behind a major campaign the opportunity to come out on top.

Google values quality and with the hyper-specific keywords, you don’t have to spend a lot of money to get a huge number of people to view your content.

Google ads are one of the most effective ways to generate engagement and spread awareness of your brand. C

CTR

When trying to define how well your ad is doing in the Google search space, CTR or click through rate is one of the most important metrics you can use to measure.

Put simply, click through rate is the percentage of total ad views that result in clicks, and like everything, Google does there is a formula behind it.

The way Google determines your click-through rate is by taking the number of times your ad is clicked and dividing it by the number of times your ad is displayed in Google’s search network.

For example, if your ad was clicked 5 times and displayed 100 times, your click-through rate would be 5%.

The average CTR across all industries is about 1.91%, but remember this is just a general average.

The industry and niche you are in greatly affects the CTR of your ads, highly saturated markets are going to be more competitive, whereas a particular niche you have focus in on can show greater engagement.

The click-through rate is a good measure of how many people are seeing your ad, and can be a good indicator of seeing if it is time to change things up with your campaign.

Keywords play a major role in how your ad is ranked, thus affecting the CTR. The biggest mistake people make when trying to optimize their copy for CTR is not writing for their customer’s needs.

One of the best ways to boost your CTR is to make sure when your customers read your copy it’s providing a solution, not asking another question.

Implementation calls to action is another great way to squeeze the most out the ad copy, boosting your CTR is vital for driving conversion.

This may surprise some people, but there is such a thing as a CTR that is too high.

While CTR is great for measuring the performance of the ad, the real measure of your business is how much money you are making, the conversion of someone who clicks to someone who buys.

Having an ad with a super high CTR, but no conversion is not a good thing, it means you have spent too much time working on your ads but not your product or service.

Having effective quality ads is vital for supporting any business, but without the product or service to match you are going to be wasting your time and money.  

Bolt Digital

Bolt digital PPC

At Bolt Digital, we focus solely on this side of the job, we have a dedicated team that will identify trends, create engaging content and optimize your search engine results so you appear right where you should.

It’s not only getting the ad out there is managing the ad while it is in the rotation.

You need to be keeping track of the relevant keywords and jumping on any new trends that can be a potential opportunity for your brand.

This is what we do day in and day out, building your brand to where you only dreamed it could be.

If you want to learn more about how Bolt Digital can help you engage more consumers and get ahead of the digital marketing curve, please don’t hesitate to contact us we would be glad to speak with you about the variety of services we prove.

You can also find out more about us via our website and Facebook.

We scale direct-to-consumer revenues for health, beauty and fashion brands.

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