How the Google Ads Auction Works? – Google Ads Bidding Mechanism

When the user in the Google search engine queries information or visits has placed Google ads on the site, these ads will be displayed in the form of sponsors. How do we decide which should be shown (sponsor) ads? Here we need to understand the Google advertising bidding mechanism.

Google bidding mechanism, as the name suggests, is a set of Google ads run and price-related competition rules, which bid is an important factor that affects whether the ads can stand out from the fierce competition, but not the only one, because the main factors affecting the display of Google ads have the following six:

1. Advertisement Bid

Advertising bid that sponsors are willing to pay for each display, click, or conversion cost, in the early advertising run, the specific price is usually based on the business in the industry (the degree of competition) and their budget (expected input-output ratio) to decide, and can always change the advertising bidding methods and prices, of course, in the actual operation of the process we want to lower prices to get better results, this can be gradually optimized through the later to the next step, and then the price can be changed. This can be gradually developed in this direction through continuous optimization, but it is not overnight.

2. Advertising quality

Google will stand in the user’s point of view to judge the quality of ads, higher quality ads can get better results, such as lower prices to get better rankings, quality rating from 1-10, of which 10 is the highest level, affecting the quality of the three factors: the expected click-through rate, ads, relevance and landing page experience, which is divided into three grades: “Above Average, It is divided into three levels: “above average”, “average” and “below average”.

Whether it is the expected click-through rate, ad relevance, or landing page experience, for the user, for example, when the user searches for a certain keyword, ads and the user searches for the relevance of the keyword, the landing page content for the user is relevant and practical, the user’s click on the ads, what are the chances of the ads? If all the indicators are very good, then the corresponding keyword quality score will be higher. Usually, we can only see the quality score of an ad at the keyword level.

How to optimize the quality score of ads?

• For the keyword “relevance is lower than average”, modify the ad material of the corresponding ad group, such as modifying the title of the ad and adding the keyword in the description of the ad to increase its relevance; in addition, you can also modify the content of the corresponding landing page, such as adding the corresponding keyword or its variants to make it more relevant.
• For the keyword “expected click-through rate is lower than average”, modify the title of the advertisement to make it more attractive and targeted; modify the corresponding advertisement materials, such as pictures, promotional information, etc., to increase the user’s willingness to click.
• For the keyword “landing page experience is lower than the average”, through the content of the web page (such as page layout, practicality, authenticity) modification, web page loading speed enhancement, web page mobile adapted compatibility, and other measures to improve the user experience, and thus improve the user retention and conversion rate.
• Note: Why do you emphasize keywords every time? Because keywords are the bridge between advertisements and users, the more our advertisements reflect a high degree of keyword matching, the more we can meet the user’s real search intent, and thus more likely to be displayed in front of customers.

3. Advertising material

In the production of ads we usually add some additional information, such as links, structured summary, phone, price, etc. Google ads will predict the effectiveness of these advertising materials, and then affect the price and ranking, for example, even if the price is not high, if the ads and additional material relevance are very good, then it is also possible to get better rankings than the customer with a high price.

4. Ad rating threshold

Simply put, it is the minimum requirement that an advertisement needs to meet to be displayed. Each time when bidding, Google Ads dynamically determines the relevant thresholds based on various factors (such as the quality of the advertisement, the ranking of the advertisement (display position), the user’s attributes, and the theme of the search), and the thresholds are reached to participate in the competition at this level and to have the possibility of displaying the advertisements in the position at this level.

In addition, the threshold can also be interpreted as the minimum bid required for an ad to be displayed, i.e. if there are no other competitors within the same threshold, then your bid is the threshold price.

The actual cost per click for our ads is calculated based on the ad rating (threshold and competition). (The main factors affecting ad ratings are: bid, ad quality, ad rating threshold, competition, ad context, and ad format.)

5. Ad Context

When a user searches for a keyword, Google Ads will analyze the user’s search term, location, type of device used, search time, and the nature of the search term’s topic, which ultimately affects the ad’s rating.

Here to mention the Google ads in intelligent bidding, one of the important advantages that is based on the different signal attributes of different users, targeted display and bidding, for example, in which period, which areas of the user is more likely to produce conversion; with a cell phone or computer users search more often.

We can’t decide the user’s attributes and habits, but we can optimize the ads according to the data, such as setting up different areas, different periods, and different devices for users to use different bids.

6. Competition

Obviously, the fiercer the competition, the higher the cost per click, even for highly rated advertisements, the higher the cost per click because of the increased likelihood of winning.

The above 6 factors can affect (decide) whether the ads will display and display location and the related click price, and these 6 factors do not exist in isolation, they also affect each other, Google Bidding Ads operating mechanism is very large and complex, and, along with the rapid development of AI technology, will be more and more used in Google Ads, we have to do is to constantly learn and Optimization to adapt to the Google Bidding Ads constantly changing and updating, so that our ads also continue to maintain in a better effect.