In Google Search Ads, businesses only have to pay when a user actually interacts with their ad by clicking on it, as this campaign type is based on a pay-per-click (PPC) model. Other campaign types, such as video and display, may have different pricing models, such as cost per a thousand impressions.
The Google Ads Auction, a real-time bidding platform where advertisers compete for ad placement, determines if and where an ad appears on a consumer’s screen. Other ad platforms use a similar auction model as well. As a marketer, it is essential that you understand the auction process and the factors that impact ad placement.
Ad Rank is a metric that shows how well-liked and relevant to a user's search an ad is. It is calculated using the bid amount and ad quality (including expected clickthrough rate, ad relevance, and landing page experience). Therefore both the Maximum Bid and Quality Score are important determinants of Ad Rank. The Maximum Bid is how much an advertiser is willing to pay for a click on a particular keyword. The Quality Score measures how relevant and high-quality the advertiser’s ad copy and landing page are in Google's eyes. There is a scale from 1-10 for the Quality Score, with 10 being the best possible. Ads with higher Quality Scores cost less per click and appear higher in search results because they are more relevant to the user's needs.
Whenever a user inputs a search query, Google immediately assesses which advertisements are qualified to display for that query through its real-time Ads Auction. The Ad Rank is used to determine which advertisements are shown and which ones are passed over during the auction. If more than one ad has the same Ad Rank, the auction goes to the one whose Maximum Bid is the highest.
Imagine two advertisers, A and B, who are competing for the same keyword in an ad auction. A and B both have Quality Scores of 7. However, Advertiser A has a Maximum Bid of $1 and Advertiser B has a Maximum Bid is $2. In this case, the Ad Rank for Company B will be higher and Company B will get the top spot in Google's search results after this bidding process.
Finally, the Google Ads Auction is an essential part of the online advertising ecosystem and has greatly improved how brands communicate with their target audience. In a pay-per-click system, the placement of ads is based on the Ad Rank, which is based on the Maximum Bid and the Quality Score. Real-time bidding is used to determine the winning advertisement.
Remember, if you want to be an expert in search engine marketing, you need to have an in-depth understanding of the auction process.
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