What is the google ads auction?

Knowledge check Which of the following factors is not considered by Ad Rank in its calculation? Select the best answer. 1. Increasing the conversion rate of your landing pages 2. Testing new ad formats and extensions 3. Rewriting ads with low CTRs 4. Context of query

1. Increasing the conversion rate of your landing pages 2. Testing new ad formats and extensions 3. Rewriting ads with low CTRs 4. Context of query

The three main factors that determine the quality of an ad Advertisers only pay when they actually receive a click on their ad; their order isn't just based on bids. Why? We want to show more useful ads in a higher position on the search results page. Find out which factors help determine the quality of an ad.

Expected clickthrough rate This is our prediction of how often an ad will be clicked on when it's shown. Across Google, we rely on user feedback to drive decision making, and user clickthrough rates (CTRs) tell us what users respond to. By allowing users to vote with their clicks, we have millions of people who are helping us to decide which ads are best for each search query. Ad landing page experience Users want ad landing pages that help them find what they're looking for. A highly relevant landing page yields a higher score. A high-quality landing page should have appropriate and original content that helps the user complete their task. It should be easily navigable and transparent about the nature of the business, how the site interacts with the user's computer, and how it intends to use their personal information. Ad relevance Ad relevance is a measure of how well an ad matches what the user is searching for, and helps to make sure that only useful ads are shown. It also prevents businesses from simply paying their way onto a search that's unrelated to their product or service.

Auction-time ad quality

Google Ads also looks at how relevant and useful your ad and the website it links to are to the person who'll see it. Quality Score is an aggregated estimate of our assessment of the quality of your ad.

How Ad Rank determines your ad position

Google Ads calculates Ad Rank for every ad in the auction. Ad Rank determines your ad position and whether your ads are eligible to show at all. Generally speaking, the ad with the highest Ad Rank gets to show in the top position, and the ad with the second highest Ad Rank gets to show in the second position (assuming the ads clear the relevant thresholds), and so on. At a high level, think of Ad Rank as having five factors.

How google ads auction works?

Google Ads uses an auction system to rank the ads that appear on the search results page, and to determine the cost for each ad click. The order in which ads appear on the page is based on a calculation we call Ad Rank. First and foremost, Google users want ads they see to be relevant. Users don't want to be bothered with ads that aren't closely related to what they're searching for. And advertisers want to show relevant ads so that users will actually click on them. Google wants to provide a good experience for users and value to advertisers so that they come back and use our services again in the future. Let's review an example of what a real-time auction would look like.

What Real time auction looks like?

Google uses a special version of a second-price auction that takes into account more than just bids—more on that later. In a standard second-price auction based only on bids, the advertiser doesn't have to pay their full bid. They only have to pay $0.01 more than the amount of the next highest bidder. Say we have four advertisers competing for space on the search results page, and they're willing to pay $4, $3, $2, and $1, respectively, for a user to click on their ad and visit their website. So in this particular case, the first advertiser was bidding $4, but they'd only have to pay $3.01—which is $0.01 above the bid of the second highest advertiser. The same thing applies to advertiser 2, and to advertiser 3. This design allows each advertiser to bid their true maximum willingness to pay for a click—but only have to pay just enough to beat the competition.

How Ad Rank influences actual cost per click

Oftentimes, average cost per click (CPC) is not the price you're paying for each of your clicks. Because the system is dynamic, the CPC can vary a lot from auction to auction and depends on a variety of factors, such as the context of each query. It's important to keep in mind that average CPC is just an average--meaning that the price you pay could be above or below that average. Higher-quality ads typically lead to lower costs, better ad positions, and more advertising success. When users see better ads, they're happier and more likely to actually click on those ads.

Ad rank threshold

To help ensure high-quality ads, we set minimum quality thresholds that an ad must achieve to show in a particular ad position

Ad Extensions Impact

When you create your ad, you have the option to add extra information to your ad, such as a phone number, or more links to specific pages on your site. These are called ad extensions. Google Ads estimates how extensions and other ad formats you use will impact your ad's performance.

Bid

When you set your bid, you're telling Google Ads the maximum amount you're willing to pay for a click on your ad. You often actually end up paying less, and you can change your bid at any time.

Context of query

With the ad auction, context matters. When calculating Ad Rank, we look at the search terms the person has entered, the person's location at the time of the search, the type of device they're using (e.g., mobile or desktop), the time of the search, the nature of the search terms, other ads and search results that show on the page, and other user signals and attributes.