The Ultimate Guide to How Google Adwords Works

Digital marketing is just like any tool. You have to know how it works to make the most of its capabilities. That’s why it’s super important to know how Google AdWords works before sinking your time or money into the program.

Knowing how AdWords works allowed Sarson’s (a centuries-old UK-based producer of vinegar) to increase their audience by 393%! They achieved this remarkable goal by understanding their audience and giving them what they need, with a bonus helping of best practices for digital marketing and content creation.

When Google AdWords launched in 2000, there was an average of 20 million product searches a day. By 2016 that number increased to 3 billion product searches a day and that growth isn’t about to slow down any time soon.

If you care to hook into billions of fresh eyes and ears you’ll need to understand how Google AdWords works. Because we’re so nice, we’ve put together this handy, exhaustive (but not exhausting) guide to give you a hand with the popular digital advertising platform.

How Google AdWords Works: A Complete Guide

There’s been a lot of talk about inbound and content marketing in recent years. While long-tail searches and organic SERPs (search engine result pages) will always be important to a digital marketing strategy, pay-per-click (PPC) advertising plays a vital role in the digital economy.

PPC is the inverse of your content marketing efforts. The same techniques that will allow you to be found on search engines will power your PPC campaigns. The same keywords you use to create your content will be used to place your ads next to relevant search results.

This is important, as your loyal customers will likely be searching for you by name. Prospective customers and clients are likely to be looking for something they need. PPC campaigns are one way for new customers to find out you exist.

Google AdWords is a fast track to the first page of the SERPs. Let’s dive deeper and find out how.

Understanding Quality Score

The Quality Score is the lynchpin of how AdWords works. Quality Score is what determines how relevant your ad is for a particular search term. You can find the specifics via Google’s Check And Understand Quality Score tool (isn’t that a mouthful?).

Whenever someone searches for your keyword, an AdWords auction is created. Basically, an AdWords auction is where your ad content is pitched against competitors using the same keyword.

The basic formula for how Google AdWords works is Ad Rank = Quality Score * bid price. Ad results are listed by Ad Rank and are displayed in descending order until the search results page is filled.

Your PPC cost is determined by the search results directly below you. This is known as the discounter. Understanding what the discounter is and how it works is integral to understanding Google AdWords.

The Discounter’s Impact On How Google AdWords Works

The basic formula for understanding the discounter is PPC = Ad Rank Below You / Quality Score + $.01.

Your PPC cost is determined by the search results directly below you. This is known as the discounter. Understanding what the discounter is and how it works is integral to understanding Google AdWords.

say you’re wanting to secure the #1 position. You do so by bidding $10 per click. The equation would look like Ad Rank = (10 * $10). In this case, your Ad Rank would be 100.

Now imagine the next bidder has a lower bid of $5 per click. Their ad would have an Ad Rank of 50. The equation is 50 / 10 + $.01. Their cost-per-click only ends up costing $5.01.

Hopefully, you’ve begun to see the importance of a having good quality score! When done correctly, you can end up costing less per click than your competition. So do your keyword research and save! With a Quality Score of 10, you’re likely to own that auction and stay on top.

Ad Auction And Display Network

Ad display networks work very similarly to how Google AdWords works. The big difference is that your ads are delivered to relevant websites that have signed up for the network. This means that you’re charged for placements instead of rankings.

This can end up being significantly cheaper, as you’re only competing against that particular ad group. You can also specify to bid on cost-per-impression (CPM). CPM is a bid based on a certain number of clicks.

How To Have World-Class Google AdWords Campaigns

Setting up a profitable PPC campaign often involves hiring a team of professionals. Google AdWords combines a deep understanding of time-honored marketing techniques with cutting-edge technology.

Not everybody has the experience, time, or resources to conduct thorough A/B testing. Not every marketing department can create a whole slew host of buyer personas. Not every content creation team can write killer copy. We all wish we could, but hey, that’s reality!

Keeping your keywords short and sweet is always a good rule of thumb. Users are less likely to conduct lengthy searches while browsing with mobile. Considering the prevalence of mobile users, this demographic cannot be overlooked. In fact, as of 2016 mobile browsing has actually outpaced desktop browsing.

Keep in mind that as the number of voice searches continues to rise, more natural search phrases are going to become more and more common. Leverage this fact and take advantage of how Google AdWords works to capture this huge emerging market.

Compelling copy or tantalizing text is another factor in having the best PPC campaign imaginable. Think of your ad as a fishing lure. Your keyword and image are the shiny spinners sitting up on the surface. Your copy would be the tasty lure that catches your customers and earns them loyalty.

The Benefits Of Google AdWords

But wait for a second, if Google AdWords works so similarly to SEO, why not just put all that energy into inbound marketing? Well, there are a few good reasons why:

1. Google AdWords introduces your products and services to new customers.
2. You only pay for how often your ad is clicked
3. Google AdWords results are frequently shown on the top of the first page of SERPs
4. Google AdWords yields rich, actionable data and metrics for your marketing department
5. Only displays relevant content to relevant customers

Consider how hard it is to get to the front page of Google for a second. Now doesn’t the privileged position of Google Ads sound like reason enough to explore PPC campaigns?

A captive audience of potentially interested new customers is also a big-ol’ perk. Intrusive marketing is on its way out. We all need to explore creative, ethical (and non-annoying) ways to get our content to people who want to see it.

Google AdWords has the potential to place your business in front of billions of Google users each month. When you understand how Google AdWords works, it helps you to make the most of digital marketing.

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