What is Google Ads and how it works?

Having an overall profitable online presence is no joke, especially when you have to compete with many marketers in the industry. The battle to reach the first page of Google search results is fiercely contested. Even with exceptional SEO, reaching the first page can take months or even a year.

To begin with, Google Ads is a paid internet advertising network provided by Google. Google AdWords was renamed Google Ads in 2018 as the search engine firm redesigned the service.

Google Ads enables you to develop online advertisements to attract audiences interested in products and services. This is where paid advertisements (PPC) come in. It runs on pay-per-click advertising, i.e., you pay every time your visitor clicks on your ad.

But why choose Google Ads when there are numerous advertising channels and tactics available? It can be difficult to identify which is the best fit for your company. To understand the why, it is important to learn the basics. In this blog, we will dive into some of the primary functions of Google AdWords.

Using Google AdWords is a popular and effective marketing approach for new businesses seeking new customers to grow their business.

Google Ads are offered in these formats – Text Ads, Image Ads, Video Ads, Product Shopping Ads, Call-only ads & Responsive Ads.

The basic operation of Google Ads stays the same: when users search a keyword, the findings of their query appear on a search engine results page (SERP). Among the results can be a paid advertisement that targets the searched keyword.

Typically, the adverts appear at the top of the SERP with the prefix Ad highlighted in bold. It helps the advertiser as the first 3 pages of Google receives majority of traffic from searches.

However, Google does not always guarantee the top rank to all advertisers. After all, you will most likely be competing with a large number of advertisers who are using Google Ads for the same purpose.

To better comprehend those ranks, let us take a closer look at how Google Ads works.

How Google Ads work

As mentioned above, Google Ads uses a pay-per-click (PPC) mechanism. That is, marketers, target certain keyword or a phrase on Google and place bids on it, competing with others who are also targeting the same search term.

Google Ads works on an auction system, which takes place every time a user performs a keyword search.

Keyword / Phrase

List of keywords / phrase that will trigger your Ad. A search term is matched with the keywords as an Exact match, Phrase match or Broad match.

Ad copy

Your Ad copy will have a heading, description and a key message to make users wanting to click on your Ad to visit your website. On clicking your Ad, you are charged for this click.


Each keyword or search term will have a cost associated to it. With manual bids, you can decide how much you wish to pay per click or with automatic bids, Google decides the cost per click at the time of the auction.

Maximum CPC bid

Maximum CPC bid is the highest amount that you are willing to pay for a click on your ad.

For instance, if your maximum bid for a particular keyword / phrase is $6 and Google deems that your cost per click is $3, you will receive that Ad Rank. If they conclude that it is more than $6, your Ad may be appear lower in order. Your Ad also needs to be relevant with a good landing page. Highest maximum CPC bid does not guarantee a top spot. Ad relevancy plays a huge role as well.

Campaign budget

You may also select the highest daily budget for your Ad campaign. With this, you will never spend more than a certain amount per day for that ad, giving you a better idea of how much you should allocate for your campaign.

Bidding options

Marketers can place their bids in one of four ways:

  1. Cost per click (CPC) – This is when a user clicks on your ad, you pay a fee.
  2. Cost per thousand impressions (CPM) – How much you are willing to pay per 1,000 ad impressions.
  3. Cost per action (CPA) – How much are you willing to pay for a conversion – ie someone filling out a form on your website, completing an ecommerce transaction, email sign up.
  4. Cost-per-view (CPV) – How much you spend when a person views your video.

Ad rank

Google Ads takes the bid price and combines it with an evaluation of your ad known as a Quality Score. “Quality Score is an estimate of the quality of your advertising, keywords, and landing pages,” as per Google. Higher-quality advertisements can result in lower rates and better ad positions.

The score ranges from 1 to 10, with 10 being the highest. The greater your score, the higher you will rank and the less time you will spend trying to convert. Your Ad Rank is determined by your Quality Score and the sum you bid. This is the spot your ad will display in the search results page.

When a user views the ad and clicks on it, the advertiser receives a charge for the click (thus pay-per-click). The concept is that the more users who click on a marketer’s advertisement, the more likely they are to achieve the advertisement’s objectives (e.g., turn into a lead, buy a product or service).

These basic functions of Google Ads help us understand how the viewer can be converted into a customer effectively. You can also target users by demographic – age, gender, household income, geographic locations, certain time of the day or days of the week, etc

To further learn the benefits and tips on PPC or Google Ads, explore our blogs to find insightful content.

If your business is ready to take the next big step towards growth, our team are PPC experts and can design an Ad campaign that guarantees leads and success. Reach out today to discuss how your brand can leverage from PPC.