By bidding on Google AdWords, almost any business can take advantage of the dominance and flexibility of Google’s products, especially Google Search. However, it is important to know how Google AdWords bidding works before “jumping in” and overspending on ads, or running an ineffective campaign with a poorly-ranked ad.
How Do I Advertise Through Google’s Search Engine?
If someone really were to make the statement, “Everyone I know uses Google!”, it wouldn’t be too much of a stretch to believe them at face value. Google dominates the Internet search business – it holds a 67% share of the market as of July 2013. To put that in perspective, the second-most popular search engine in the United States, Microsoft’s Bing.com, held just 17.9% of the market in the same period. This means that many businesses want to advertise on Google’s products, especially Search.
Luckily for smaller businesses and businesses with modest advertising budgets, Google provides advertising solutions that are affordable for almost any business. Google provides this advertising through its AdWords program. Through AdWords, Google provides a way for businesses to not only advertise on Google Search, but also other Google web-based services and other websites that utilize Google’s display network.
There are two main components of AdWords – the utilization of search keywords, or “ad words” to pair specific advertisements with matching search queries, and Pay-Per-Click (PPC) advertising, which is the basis for how much advertisers are charged per campaign.
Through the use of keywords, Google can specifically match an advertiser with a user, turning that user into a potential customer. If you are a florist in Breckenridge, CO and a user were to submit a Google Search query for “Florists Breckenridge Colorado”, there is an excellent chance that this user would be interested in your advertisement, and you would want your ad to appear as close to the top of the corresponding results as possible. However, the Breckenridge florist would mostly likely not want to bid on the keywords “flowers” or “florist” – both would be too generic and extremely wasteful, as Google users searching for florists in New Hampshire, Alaska and Oregon would be unable to utilize this Breckenridge florist’s services.
It would be detrimental to Google’s reputation as an advertising platform as the users in these three states would eventually determine that Google’s ads were irrelevant and ineffective, leading to less clicks overall. The key to successfully utilizing Google AdWords is to bid on the keyword that will be the most effective in driving clicks to an ad. Subsequently, Google becomes more interested in promoting advertisers with a proven track record of success with ads that place higher in their search engine results.
Not A Typical Auction
It is important to note that bidding on Google keywords is not like a traditional auction – advertisers don’t actually “own” keywords through successfully “winning” an AdWords auction and AdWords auctions happen constantly – billions of times per month, or every time a user submits a search query! The auction is simply an automated process used to determine how much an advertiser will pay per click of an ad and the order by which each ad will appear when search results are presented to a user.
Quality Scores Count
Surprisingly, the bidder with the deepest pockets will not always commandeer the highest-ranking ad. Google considers two factors when determining a bidder’s keyword “Ad Rank” and the subsequent ad placement and Cost Per Click (CPC) – the “Quality Score” of each bidder and the maximum bid submitted. To earn a high keyword Quality Score, an advertiser must prove to Google that ad in question and its corresponding product or service will be the most relevant to the user.
Cost Per Click
Google determines an advertiser’s Quality Score for a keyword through a number of different factors, most of which relate to the effectiveness of current and previous campaigns. Google then determines the CPC of an ad by dividing the ad rank of the ad situated below by the Quality Score. If you are the only bidder in the auction, you will pay the maximum amount bid. If you have the lowest Quality Score in the auction, Google will also require you to pay the maximum amount bid and your ad placement will be very poor.
No Minimum Bid
It is important to note that there is no minimum bid requirement, so advertisers can begin to utilize keywords with small, inexpensive campaigns and work on building up a good Quality Score for each keyword. In time, if these campaigns have been structured correctly and are successful, an advertiser may find their ads placed very highly within Google’s search results, and possibly at a lesser cost than their competitors!