Growth Journal

Understanding Google AdWords Auction Model

By January 3, 2019 No Comments

How often have you felt the desire to use AdWords but ended up getting confused owing to technicalities surrounding the usage of the platform?

Adwords Auction Model

Or, have you come across agencies making tall claims about their AdWords skills?

We are sure by now you have understood well what exactly Google AdWords is and how it helps you drive relevant traffic to your website? If you haven’t taken your time out, it is recommended to check our helpful article base on AdWords that explains everything you need to know about.

AdWords – An intelligent platform designed by Google that lets them access more than 85% of the relevant internet traffic at a click of the button. However, new users often fail to draw to a clear line between what they are paying for versus what they are getting in return.

The auction model of Google isn’t really a complex system. However, this auctioneering model of Google has high relevance to understanding how it makes a difference to your traffic, how often are your ads triggered and in return understanding if your investment is worth the effort.

How are Google Ads Triggered?

An intelligent auctioneering system powers Google Ads. Further down, to trigger an ad Google depends on two factors

  1. Auction
  2. Bidding

For those of you who are new, think of a traditional bidding system where the bidder puts an item for sale and auctioneers place a bid to get hold of that particular item. Simply put, in Google’s term that ‘item’ is the space that your ad qualifies for.

However, what differentiates Google Ads from the traditional auctioneering process is your ad should be of high quality pepped up with right bidding amount.

Does Google decide your Ads Quality Score?

Yes, Google is partially responsible for deciding the quality score of your ad. However, the larger part of the decision depends on the users of your site.

CREDITS: WordStream

One may ask how can Google know whether a user is interested in the particular services an ad offers.

Whenever someone clicks on your ad, Google places a cookie on the end users system. This cookie helps search engines understand the time spent by the user on the promoted site as well as their actions such as shares, comments, likes, recommendations etc.

When someone is genuinely interested in the product they take ample amount of time to stay on your website and might also come back at a later stage. This, in the eyes of Google, ups your website trust which directly reflects on your quality score.

When you have a better quality score, Google incentivizes you with discounted ad rates. It is a win-win situation for everyone involved when they understand the process and take sufficient steps to improve their offerings.

How much do I ideally pay for each AdWords Click?

This question is tricky and often many users, including experienced marketers, end up either overpaying or underpaying for a given keyword.

Let us walk you down with a simple exercise to help you understand how much money can one pay for any given click.

  • What is the price of your goods or services that you intend to sell?
  • Factor in the other costs such as production and shipment costs
  • Subtracting these gives you an estimate of how much profit you make per sale

Optimize your Ad costs and profits strategically to ensure you break-even on your AdWords spend.

Ash Bhattacharya

Author Ash Bhattacharya

Ash is an Australia based Digital Marketing leader helping Entrepreneurs, Startups and Businesses of all sizes, inject immediate cashflow into their business by generating more leads and sales.

More posts by Ash Bhattacharya

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