What is Google Ads?
Google Ads (previously known as Google AdWords before July 2018) is a platform developed by Google for users to advertise their product, services, and content online.
In Google Ads, advertisers pay to display brief advertising copy, video content, and product listings, within the Google Ad Network to Web users.
Google Ads was first launched in 2000 and it is the main source of revenue for Google. (Total advertising revenues of USD $95.4 billion in 2017.)
The system of Google Ads is based partly on cookies and partly on keywords determined by advertisers.
[NOTE: We will talk about keywords in detail in upcoming blogs]
Google uses these keywords and cookies to place Ad copies on pages where it thinks might be relevant.
It offers services under a pay-per-click (PPC) pricing model.
But also an advanced bidding strategy can be used to automatically reach a predefined cost-per-acquisition (CPA), not be confused with a true CPA pricing model.
WHAT IS SEARCH ENGINE MARKETING AND PPC? WHY SEARCH ENGINE MARKETING? AND WHICH PPC PLATFORM TO CHOOSE?
Where Google Ads appear?
To understand this first we need to understand what Google network is:
Google Network is a network of all of the places where your ads can appear, including Google sites, websites that partner with us, and other placements like mobile phone apps.
It is divided into groups so that you have control over where you want your Ad to appear
Google Search Network (GSN) – Google.com search results pages + Google sites like Maps and Shopping + Search Partner Websites
Ads can appear above or below search results on Google Search.
They can appear above, or below or beside the search results on Google Play, Google Shopping, and Google Maps, including the Maps app.
Google Display Network (GDN) – Google sites like YouTube, Blogger, and Gmail + 2 million partner websites and mobile apps.
To show your ads to people as they browse the web. Your text, image, and video ads can appear on the Google Display Network.
Why use Google Ads?
- You can reach new customers and grow your business through it.
- It has advanced targeting options – Choose where you want your Ads to appear.
- Can set Flexible Budget – Set a budget that is comfortable for you.
- There is no minimum spending requirement.
- Measurability – Track the impact of your ad campaigns.
- You can pause or Stop an ad campaign at any time.
- Digital Marketing of advertising in India to grow at 32% CAGR to reach Rs 12,046 crore by Dec 2018 and Rs 19,000 crore by 2020.
Understanding Ad Rank and Ad Position
When working with Google Ads your Ad position refers to where your ad falls among the ads placed around specific search results.
In traditional advertising platforms, the person who pays the most will get the best ad placement. This is not necessarily true in ad placement bidding for search engines.
It involves a combination of different factors to determine Google Ad Rank.
You have to remember that search engines are trying to give the most relevant information they can to its users.
This is the reason why most search engines use custom algorithms to determine ad placement based on factors like relevance, landing page quality and bid price.
When you search something on Google, the Google Ads system finds all ads whose keywords match that search.
From those ads, the system ignores irrelevant ads like ads that are targeting a different country or are disapproved.
Of the remaining ads, only those with high Ad Ranking may show.
Remember, Even if your competition bids higher than you, you can still win a higher ad position – at a lower price – with highly relevant keywords and ads.
And, since the auction process is repeated for every search on Google, each auction can potentially have different results depending upon the competition at that moment.
How does an Ad appear on a top slot?
To understand how ad position is determined we have to understand how Google Ad Rank is determined.
Hal Varian, Google’s Chief Economist, says that they use a variation that is called a second price auction for ad placement.
In a second price advertising auction, the advertiser only have to pay enough to beat the next highest bidder below them, they don’t have to pay their full bid.
For example, Bidder #1 bids Rs. 4,
Bidder #2 bids Rs. 3, Bidder #3 bids Rs. 2, and Bidder #4 bids Rs. 1
In a traditional auction, everyone is placed in descending order and each would pay what he or she bid.
In a regular second price auction, on the other hand, their placement is still descending but bidder #1 pays Rs. 3, Bidder #2 pays Rs. 2, and Bidder #3 pays Rs. 1, and so on.
|TRADITIONAL AUCTION||SECOND PRICE AUCTION|
|BID PAYMENT||BID PAYMENT|
|Bidder #1||Rs. 4||Rs. 4||Bidder #1||Rs. 4||Rs. 3|
|Bidder #2||Rs. 3||Rs. 3||Bidder #2||Rs. 3||Rs. 2|
|Bidder #3||Rs. 2||Rs. 2||Bidder #3||Rs. 2||Rs. 1|
|Bidder #4||Rs. 1||Rs. 1||Bidder #4||Rs. 1||…|
Because Google wants to show highly relevant ads to their users, Your ad placement through Google Ads takes into account more than your maximum bid
So, your ad position is determined using their Ad Rank algorithm.
The core elements of your Ad Rank are:
Ad Rank = f (Max CPC, Quality Score)
Interestingly, if your Ad rank isn’t high enough your ad may not show up at all because Google feels it’s not relevant to what user is searching for.
The graphic below may help in making it easier to understand.
|Maximum Bid||Quality score||Format impact||AD RANK||APPX. CPC|
|Bidder #1||Rs. 2||HIGH||HIGH||=||20||Rs. 1.73|
|Bidder #2||Rs. 3||HIGH||LOW||=||18||Rs. 2.24|
|Bidder #3||Rs. 1||MEDIUM||MEDIUM||=||8||Rs. 0.69|
|Bidder #4||Rs. 4||LOW||NO FORMAT||=||5||NOT RELEVANT ENOUGH TO RANK|
As you can see, your ad position is not just about what you’re spending.
Bidder #3 for a first position has a lower Cost per Click (CPC) and better ad placement than, Bidder #2 has for the second position because their Ad Rank is higher due to high estimated format impact.
If Bidder #2 wants to move to the first position, he should improve his quality score as well as edit his ad format or he can increase his maximum bid which will also increase their CPC.
Point to be noted here is that the Ad Rank is calculated separately for every search query.
Tips to help your ads make it to the top
- Focus on Relevance: Keywords, Ads & Landing Page
- Keep keyword list fresh: Use right keywords to reach your customers. Use the Keyword Planner.
- Keep Bids Competitive: Keep your bids competitive enough to compete with other advertisers
What is a Quality Score?
Quality Score is a rating measurement Google gives keywords based upon:
Score of 1-10 (1 being poor, 10 being great)
- Max CPC is not necessarily what you pay for a click, actual CPC is.
- Actual CPC is calculated for every single click so it’s a logistical nightmare to sift through the data. Therefore, average CPC is used for practical purposes (average of all actual CPCs)
- The higher your quality score, the LESS you’ll pay!
- Use relevant ad extensions to win the auction.
- Quality Score is further boosted by use of ad extensions along with your
- Standard text ads on the Search Network.
Google Ads in a way has transformed how people can connect with potential customers.
Sure, it can be a big investment both in terms of money, but it gives a better result than other marketing channels in terms of increasing your revenue, sales, and leads.
Also, it’s important not to forget that it’s entirely possible to run profitable campaigns with low CPCs even on the smallest of marketing budgets all you need is a skillful and experienced campaign manager.
Looking at the current marketing and business scenario, Google ads are an essential part of the marketing mix.
This brings us to the end of our second blog in a series of blogs about Search Engine Marketing.
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See you soon.
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