What type of auction is adwords

It is often misstated that advertisers pay one cent more than the advertiser in the spot below them. CPC is calculated using this formula:. The Ad Rank of the ad below is factored into the actual CPC that an advertiser will pay if someone clicks on their ad.

The subsequent order in which eligible ads appear on the page. How much each advertiser will pay if their ad is clicked. What is Quality Score? Google looks at three things when calculating Quality Score: Expected click-through rate CTR , which reflects the likelihood a user will click on an ad.

Ad relevance to the query. The ad copy should clearly relate to what the user is looking for. Landing page experience. Are the users directed to a page that reflects the intent of the query, and does that page provide a good user experience? Since there are so many people out there who don't really know how this "Google Ads auction" works and are wondering what is PPC , we thought it would be helpful to illustrate it. And lots more interesting tidbits about how Google AdWords works.

Click the image to see for yourself and learn Google Ads. You might also be interested in our article answering the question, " Does Google Ads Work? Likes include wine, karaoke, poker, ping-pong, perfume, and poetry. Home Blog. Last updated: October 8, Paid Search Marketing.

The highest bidder wins the first position and the second highest bidder wins the second position and so on. But Google charges each winning bidder the bid of the next highest bidder. The additional one cent is to outbid the next highest bidder and retain the current ad position. But this is not it. Maximum Bid is the amount an advertiser is willing to pay to Google for a given keyword and the ad associated with the keyword. An advertiser defines the Maximum Bid well ahead of the auction.

It is not the Actual Bid. Actual Bid is what Google charges the advertiser after the AdWords auctions. Actual Bid for an advertiser is usually a cent greater than the bid of the advertiser in the second position. What quality factors does Google consider before adjusting an advertiser a winner in the auction for ad position?

And it is important to understand why these additional factors are essential. Google follows a well-defined norm to help advertisers and user. Google understands that its users want to see ads that actually mean something to them. Likewise, advertisers also want to present relevant ads to users to gain clicks and accelerate their business growth.

An ad with an extension containing a phone number, website URL, and additional information is of more benefit to a user than a bland ad. Ads offering more value will also drive a better click through rate. Likewise, ads with more information are more relevant. Learn about different Ad Extensions in AdWords. Google combines quality factors and ad format impact with maximum bid set by advertisers to derive a score for ads.

This score is called the Ad Rank. Quality factors and ad format impact are clubbed into a Quality Score. Following the example from above, all the four advertisers also have a Quality Score associated with their keywords now.

And how ad ranks are going to change the ad positioning. From the two tables, we can very easily see a significant change in the ad position. Quality Score did play a crucial role.