Every search in Google goes through the pay per click ad auction.
The process of the ads auction platform decides which PPC ads will appear for that specific search.
The order of those ads is determined by the maximum cost per click bid and quality score metrics.
The quality score and ad rank are calculated to determine whether or not the ad actually shows and in which ad position it will show on the page.
It makes users happier because users get to see more relevant ads. It makes the advertisers happier because the advertisers are showing more relevant ads, ads that are more likely to get results from the viewers. And it makes Google happy because, with happy users and when happy advertisers, we get more people using our system.
The top-rated PPC agencies in the UK are using secret strategies to win in the Google Ads Auction in April 2024.
In our Google Ads Auction Platform guide, we will highlight everything you need to consider for running a successful PPC campaign.
Table of Content
How does the Google Ads Auction Platform Work?
Here’s how the Google Ads Auction Platform works:
- Google PPC Ads system finds all ads whose keywords match the search intent
- Google Ads Auction Platform ignores any that aren’t eligible and do not match query intent
- Google Ads Auction Platform ignores ads that target a different country or are disapproved based on a policy violation
- Google Ads Auction Platform calculates an ad rank strategy to relevant ads
- The relevant ads are displayed in order of ad rank, bids and quality to meet the searches intent
The most important thing to remember is that even if your competition bids higher, you can still win a higher ad rank position.
The Google Ads Auction Platform process is repeated for every search on Google, each auction can have potentially different results depending on the competition at that moment.
How Quality Score Affects the Ad Auction
The PPC campaigns quality score directly affects the ad auction as Google uses an Ad Rank formula.
The pay per click position in the search results is determined by the Ad Rank score.
The formula for Ad Rank used to be simply:
Quality Score x Maximum Bid = Ad Rank
The bid is not the only thing that determines which position an advertiser gets, with other common factors:
- Minimum ad rank thresholds for ads to be shown
- Matching the search intent of the query searched
- Quality of the ad extensions
How Cost Per Click is Calculated?
The PPC cost per click is calculated by:
- Rank all advertisers in order of ad rank
- Take the ad rank score one below you on the ad rank table
- Divide that ad rank score by your personal quality score
- Add £0.01 to that price
- That works out how much you pay per click on Google Paid Ads Auction
As you can see from the image the cost per click (CPC) depends very much on how competitive the term is with other advertisers bidding on the same keywords and the quality score you have on that specific query.
Popular Questions
Why does google not sell the top positions to the highest bidders?
Google would more money more if they sell the top positions to the highest bidders.
But the highest bidder does not mean it is the best result for the user.
If Google started to show irrelevant results that would lower the quality and relevance of the Google search results.
If the search results are lower quality this will force customers to use a different search engine.
For this reason it would be crazy for google to present the highest bidders to the top positions without a quality score being implemented in their auction campaigns.
What type of auction does Google Ads use?
Google Ads uses the second-price auction mechanism.
Advertisers pay just enough to beat the underbidder of the next ranked ad.
In a second-price auction, as we’ve already talked about, the highest bidder who wins the auction will pay one cent higher than the second-highest bidder.
Each site has an ad rank based on CPC bid multiplied by the quality score to create a league table.
Using the second-price auction mechanism you pay 0.01 more than the next ranked ad divided by your personal quality score.
How many times does a Google auction run?
The Google Ads auction runs every time a search is made on their search engine.
Each ads auction decides which ads will show at that moment in that space.
Your bid and quality score put you in the auction to attempt being shown.
Summary
A successful Google Ads advertiser optimises the PPC campaigns daily to improve quality scores.
Bidding on the most relevant queries will improve conversion rate optimisation, increase CTR and generate higher quality scores.
Striving to score 9 or 10 on the quality score can half your CPC costs and be the difference between a positive ROAS or a negative ROAS (return on ad spend).
Pay Per Click Tips
Here is the full list of online PPC tips: