Going Once, Going Twice – How Google Auctions Ad Space

Learn how to make sure your PPC ads get to the top, so you can start generating real results from your investment in a paid media strategy.

You might assume that when buying ads through Google AdWords, the best ad placement at the top of the search results page will automatically go to the person who is willing to pay the most for it. This is not always the case. There are a number of different factors that all play a role in determining when and where ads are shown.

This auction isn’t all about the money

Google uses an ad auction every time a search query is created. This means that every time someone searches for a term on Google, the system generates an auction for all available ads targeting the keyword the user searched for. This auction determines the rank each ad has and ultimately places the ads in the right position on the page, but it’s not all about the money.

How your ad rank is established

Your ad position, or the spot your ad is placed on the search engine results page, is determined by the ad rank Google assigns during each search query. Ad rank is not only determined by the amount you are willing to pay, though. Your bid is only one of a few factors Google takes into account. Here are all of the factors that determine ad rank:

Bidding: The amount you are willing to pay for a click on your ad is part of what determines the rank Google gives it. A higher bid may help bump your ad to the top, but you will not always pay the maximum cost-per-click (CPC) that you bid.

Expected click-through-rate: Google’s advanced algorithms determine how likely the searching user is to click on your ad and assigns it an expected click-through-rate (CTR). The higher the CTR, the more likely your ad will place near the top.

Landing page: The website your ad links to needs to be high-quality and easy to navigate. Google doesn’t want to send users to websites that are messy, difficult to read and frustrating to use.

Relevancy: Google verifies the ad you want to show and the search term the user is looking for are relevant. The more accurate the keyword is to your ad and website, the better your ad will perform.

Ad format and extensions: Some ads have special formats including “call now” buttons or addresses that make the user’s experience better. Formats and extensions can help boost your ad rank by boosting the click through rate and relevance of your ad.

Google takes all of these qualities of your ad and weighs them against the other ads you are competing against. If these qualities are better than a competitor’s ads, you’ll likely rank higher.

Conversely, if you have a bid much higher than the other bidders, but your landing page is low-quality and your keyword isn’t as relevant as other ads’, you may not get a very good ad rank and your ad might not show at all.

Once Google determines the ad rank for all available and relevant ads, it will display those ads for the search user. If your ad is shown and the user clicks on it, you will be charged for the click. The amount you will be charged is the minimum amount you need to pay to hold your ad rank above your competitor—this means you won’t necessarily have to pay your max CPC!

Remember, this process occurs every time a user searches for a keyword you use in your Google ads. If your ad was placed in the top position in one search, it may not be placed in the top—or any—positions in the next search. It all depends on your ad rank.

Check your quality score and make adjustments

To see how your ads measure up to the competition, you can adjust your bid, as well as check your Quality Score. The quality score provided by Google gives you an idea of how good your ads are on a scale from 1 to 10. Quality score is only an estimate but can help you see the need to improve ads for better results.