Understanding the Google Ads Auction & Why Ad Rank Is Important

April 26, 2022

Google ad auction is essential since it takes place every time a user performs a search. It determines the kind of ads, shown on the search result page. Google ads are important because it displays your ad online. The auction system decides which advertiser gets to appear where and for how much.

Google Ad auction is an automated bidding procedure. It enables the advertisers to bid on each keyword. This will assist the users to easily locate an ad with the help of these specific keywords. Google ad auction is vital since it takes place every time a user conducts a search that matches your keywords.

Over three billion Google searches are conducted daily, with 84% of people using Google at least three times per day. Google ads, PPC, and google searches are an important element indigital marketingpractice. Unlike the other search engines, Google Ads uses an auction system to place ads on your search terms. Google determines the position and cost of an advertisement by using a value called Ad Rank. If an ad does not meet Ad Rank thresholds, it will not be shown in search results.

Google Ads Auction Explained!

Google's PPC (pay-per-click) system selects the most relevant ads for a given search query. PPC displays them on top of the organic results, with more relevant ads getting higher positions. PPC marketers identify the keywords they want to bid on and set their maximum cost-per-click bid. They also create ad groups containing these keywords and related ads.

Google Ad Auction Process

  • Google Ads finds relevant ads for every search query.
  • Ads can be displayed for a specific type of location because it promotes location targeting.
  • Based on their position in the search results and relevance to the query, the remaining ads will be assessed.

According to Google, the SERP (search engine results page) will display an ad that has been won at auction, based on its Ad Rank.

Understanding Google Ad Rank

Ad rank is important because it displays your ad to the audiences. To be eligible to appear on Google, ads must meet certain quality criteria, and will be ranked according to their Ad Rank. The highest-ranking ads will appear on the top of the page; lower-ranking ads will appear lower down the page. Any ads that don't meet minimum quality thresholds will not be shown at all. Ad rank is vital in digital marketing since it provides a quality score, determining order of ads.

Formula for Calculating Google Ad Rank

When someone searches for something on Google, their search query triggers ads that match their keywords. For example, if someone searches for "women’s running shoes," they'll see ads that include those keywords. But which ads will be displayed? And in what order?

To answer those questions, Google looks at two main things: your ad ranks and your Quality Score. Ad rank is based on your Quality Score and bid amount (also known as maximum cost-per-click or max CPC). Together, these two factors determine your ad position — where your ad will show up on the page — and whether it will show at all.

So how is Google ad rank calculated? It's actually pretty simple: Ad Rank = Quality Score x Max CPC bid

Using this formula, Google calculates each advertiser's Ad Rank. It then determines which ads are eligible to show in the top positions and in what order they should appear. This means that your quality score and maximum CPC bid determine the position of your ad. If you want to increase your ad position, you’ll have to improve your quality score or increase your maximum CPC bid — or both.

Need to Focus on Your Google Ad Rank

Google Ad Rank is the position your ads have on Google’s SERP (Search Engine Results Page). The position of your ad on a search engine results page determines how many people see it, which influences how many people click on it. And this, in turn, influences the success rate of the campaign. Ad Rank can make or break your business. If you want to be successful on Google Ads, you should focus on improving your Ad Rank!

If you have a Google AdWords account, you probably keep an eye on your click-through rate (CTR). CTR measures the number of clicks your ad receives divided by the number of times it is shown — also known as impressions. Your CTR can help determine whether your ads are relevant and compelling enough to appear on the first page of Google search results.

However, even if your ads are highly relevant to your target audience, they may not show up on the first page of Google search results if you don’t have a high enough Ad Rank.

What is Cost-Per-Click and How It Affects Actual CPC?

Cost per click (CPC) is a metric that indicates how much you pay for each click in your Pay-Per-Click (PPC) marketing campaigns. Your actual CPC depends on your Quality Score and the amount of competition in the market.

The key to a successful AdWords campaign is understanding how your bid affects what you pay for a click and how to use this information to optimize your account. One of the most important pieces of information about your campaign is the actual amount you pay for each click. Actual cost-per-click (CPC) is the final amount that you are charged for a click on your ad.

Ad Rank has an impact on the actual CPC you pay for a click on your ads. This is because the higher your Ad Rank, the less you pay per click for a given ad position.

Understanding Quality Score and Factors that Determine Quality Score

Your AdWords Quality Score helps you to understand how well your ad is performing relative to the other advertisers who appear alongside it on Google search results pages. A higher quality score generally results in a higher ad position and can help you attract more traffic and improve your return on investment. The Quality Score is an indication of how relevant your ad is likely to be based on historical data.

Quality Score is based on the performance of three components:

Predictable CTR

An ad's expected click through rate (CTR) is a prediction of the number of times a user will click on an ad when he or she sees it while searching on Google. Expected CTR projections are based on an ad's past performance and the performance of other ads competing to appear alongside your ad for a particular search query.

Relevancy of Ads

Ad relevance is a Google Ads quality score that determines how well your ad matches the user’s search intent. A high-quality score can help reduce the risk of your ad being disapproved or removed. Hence, ad relevancy is an important factor to consider. 

Landing Page Experience

The landing page experience measures whether your website landing page is relevant and useful to people who click on ads for your website. Landing page experience is import to consider since it boosts customer retention.

To Conclude…

Google Ads auction is important part of digital marketing process. This is because for each search takes into account ad position, ad rank and quality score to determine which bids are eligible to appear in its top positions. By improving these components, you can improve the rank of your ads.

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