Ishwar Gupta

February 28, 2018

Google AdWords – How does it work and How to use it?

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In the space of Digital Marketing, Display ads and Search ads, Google AdWords holds a high importance. It is very effective if you do it Correctly. The key to how Google AdWords works is the Quality Score. Quality Score is generally how well an ad group, keywords, ad and landing page relate to what a person is searching for, and how likely someone is to click on the ad. Here is Google’s page for “Check and understand Quality Score.” Now let’s get into some basics and learn how Google AdWords works.

What is Google AdWords?

Google AdWords is an online advertising service where advertisers pay to display brief advertising copy to web users. It is Google’s own advertising service through which you can place search results for your website on a search engine results page (SERP) by paying for them. Earlier, New sites needed to wait a lot to increase their ranking organically. Now with AdWords, you can see immediate results in your ranking and conversion goals.

Paid Searches

Broadly speaking, paid search marketing is, as the name suggests, when you pay to get search results. Those search results which have been displayed under caption “Ad” for some specific search query. For these type of searches, a user needs to pay Google some amount of bucks based on PPC, CPC, etc. campaign running under Google Adwords. These paid results are always displayed above the organic results.

How does Google AdWords work?

Suppose you are an entrepreneur or have a business, you will have some specific, highly relevant keywords to your particular business. These keywords or phrase are those queries which a searcher puts in a search engine to find you. There are a lot of other business/companies with the similar keywords competing for the search result. Now, what basically happens is that you bid for those keywords in Google AdWords. The whole process goes through an auction within a fraction of seconds and winner’s ads are shown on top of the results.

Understanding auction process

Now every time someone does a search on Google, an AdWords auction is created. Every advertiser who has a keyword match to the search query competes in the auction. How well each advertiser competes is based on their Ad Rank. Again, using a slightly simplified version:

Ad Rank = Quality Score * Bid

Ads are placed in order based on Ad Rank. The highest Ad Rank gets the top spot and so on down to either the last ad qualifying for the auction or the last position on the page.

Bidding price is the highest amount an advertiser is willing to pay. But, in reality, What an advertiser actually pays is the lowest amount necessary to beat the Ad Rank of the competitor below them. You can learn more on best bidding Strategy and practices in our upcoming blogs.

Do you pay exactly what you bid?

No, Bidding price is the highest amount an advertiser is willing to pay. But, in reality, What an advertiser actually pays is the lowest amount necessary to beat the Ad Rank of the competitor below them. For a winner, it is always less than what he bids for. In a nutshell, if you have the best Quality Score, you control the auction unless others outbid you. You can learn more about how final bidding price is calculated and how much a bidder actually pay.

How to use Google AdWords effectively?

  • Know the Basics
  • Define goals for sales, traffic, subscriptions and accordingly deploy your budget.
  • Negative keywords are must avoid, focus on marketing keywords.
  • You need to focus on all levels of your campaign creation:
    • Targeted audience
    • Location
    • Campaign keywords
    • Ad Groups
    • Ad copy
    • Budget adjustments
    • Landing Pages

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