How do you know your ad will show up once it’s set live? And, what position will it have on the results page? Enter the Google auction, the system’s way of deciding which ads will show and how they’re positioned.
Google Ads uses an auction system to rank the ads that appear on the search results page and to determine the cost for each ad click. The order in which ads appear on the page is based on a calculation called Ad Rank. Three factors impact Ad Rank: expected clickthrough rate, landing page, and ad relevance.
Google Ads calculates Ad Rank for every ad in the auction. Ad Rank determines your ad position and whether your ads are eligible to show at all. Generally speaking, the ad with the highest Ad Rank gets to show in the top position, and the ad with the second-highest Ad Rank gets to show in the second position. (Assuming the ads clear the relevant thresholds and so on).
Finally, there’s the quality score. Oftentimes the average cost per click, or CPC, is not the price you’re paying for each of your clicks. Because the system is dynamic, the CPC can vary a lot from auction to auction. It also depends on a variety of factors, such as the context of each query. It’s important to keep in mind that average CPC is just an average, meaning that the price you pay could be above or below that average.
Why is bidding a challenge?
Bidding impacts performance. Keyword bids influence how visible your ads are and the amount of interaction you get for each query. If you don’t bid efficiently, you could miss valuable conversions or spend too much on the wrong keywords. The search auction is dynamic. Given the dynamic nature of search auctions, the right bid can often be a moving target that is impossible to reach at scale.
The buyer’s journey is more complex than ever. Many signals influence user behavior.Their intent and likelihood to complete valuable actions for your business vary based on location, time, device, and attribution model. Taking all these signals into account for each keyword and bidding accordingly could require an army!
Enter Google’s Smart Bidding.
Google’s Smart Bidding solutions were created to help you tackle this challenge. These solutions aim to set the right bid for each and every auction, while taking into account your marketing objectives!
There are so many benefits to taking advantage of this feature. Smart Bidding frees up time, so you can focus on strategy. Cross-referencing audience data with context to establish intent and set the right bid is a complex and time-consuming task. A study by Boston Consulting Group recently showed that 80% of digital marketers’ time is spent on tasks such as placing bids, while only 20% is spent on strategy! For many advertisers, automation offers much-needed alleviation on the strain on marketing resources.
Google Ads Bidding algorithms tailor bids to each user’s unique search context, using relevant signals present at auction time. This is a unique capability on the market, as third-party bidding tools adapt bids only a few times a day. Auction time bidding allows for bid differentiation with a high degree of precision, based on the conversion opportunity of each auction. Smart Bidding enables you to bid on exclusive signals. Google Ads’ algorithms integrate a large variety of signals and consider new ones to evaluate intent. You can also go a step beyond traditional signal analysis by recognizing and adjusting for meaningful interactions between combinations of signals and constantly consider new ones.
The ever-growing breadth of data creates more complexity for advertisers to set bids based on each user’s context. While it’s totally possible to identify a bidding strategy that works well for your business, Smart Bidding makes it simple for you to see success at the auction and make sure you can get back to what matters most – solving problems for your customers!