How Do Google Ads Work? Learn the Basics

If you have an online business, it’s a given that you should do advertising. Otherwise, how will you put your product or service out there and in front of your target audience? Advertising is one aspect of online business that you can’t afford to ignore.

If you’re considering to spend any amount of dollars on a marketing strategy to reach your target customers, better make sure that you spend it in the right place. In my world, my idea of the right place is somewhere with 3.5 billion daily searches and 246 million unique visitors.

If you’re thinking of Google Ads, then you’re right on the money!

Many of our clients want to dive right into Google’s paid search network but they’re often not sure how the platform works. If you want to learn how Google Ads work, then you’ve come to the right place.

For this article, we’re going to talk about Google Ads, how it works, and some quick tips to help you succeed.


What is Google Ads?

If you’ve been using the internet for a while, you’ll have heard of Google Adwords. In 2018, Google rebranded its ad lineup and it became Google Ads.

This pay-per-click (PPC) online advertising platform allows advertisers to display their ads on Google’s search engine network. Like its namesake, PPC is a marketing channel where you (the advertiser) pays for ad click or impression.

Google Ads is widely considered a very effective advertising network because it drives good-fit customers that are qualified. This means that your ads are displayed to users who are searching for products and services like the ones that you offer. With the help of Google Ads, you can generate more site traffic, leads, receive more phone calls, and receive more in-store visits. This is good because 72% of customers who searched locally have visited a physical store within a 5-mile radius.

Google Ads can work for all types of businesses, whether big or small. However, the barrier of entry for Google Ads is that it can be a difficult platform to master. To get the most out of your Google Ads campaign, you need to know how it works.

Now, let’s start with Google Ads’ two different networks.


Where are Google Ads Displayed?

Google Ads is currently divided into two different networks, each offers different options to cater to a wide range of advertising needs.

  • Google Search Network
  • Google Display Network

Knowing the difference between the two networks and which network to utilize for your advertising is part of your uphill battle for ad space domination. Let’s first define each network.

Search Network VS. Display Network 101

When you think about Google Ads, you’re probably thinking of paid search ads that appear on the Google search engine results page (SERP). As you might expect, those are ads on the Google Search Network. Makes sense, right?

The Search Network is more popular between the two networks, and it also happens to be the most popular PPC channel on the web. The Search Network works because it gives advertisers the ability to engage audiences at the exact time when they are actively searching for your product or service.

You can say that the Google Search Network is like the new Yellow Pages because now prospects use search engines when they have the intent to purchase. Potential customers flip through their digital Yellow Pages using keywords. They have the intention of finding a product or service, which gives businesses a targeted avenue to reach their target audience.

On the other hand, the Google Display Network doesn’t have anything to do with Google Search.

Display Network ads appear on websites that are partnered with Google–sites that are looking to make money via the Google AdSense program. Any website can enroll with AdSense and display ads on their webpages. Then advertisers can utilize the Display Network to market to visitors to those webpages. As of this writing, there are over 11.1 million websites that use AdSense. This should give you an idea of just how massive the Display Network in terms of size and reach.

The main difference between the two is that the Display Network shows ads to people who aren’t actively searching, while the Search Network is for people who are actively searching for information.

In a sense, Display Networks ads are interrupting people as they browse Google-partnered websites. This makes the Display Network a good channel for increasing brand awareness. For instance, if you’re a new business and people don’t know you exist, how can they search for you? The Display Network allows you to display ads where your target audience spends time online.

Where Your Ads Will Appear

Google Search Network

  • The primary channel where your ads will appear is the main Google Search interface. These paid ads may appear at the top or bottom of the search results. Of course, as an advertiser, you want to be in the top 4 positions for your targeted keywords because these positions are immediately visible to the user.
  • In addition to the Google SERPs, your ad may also appear on Google’s other websites such as Images, Maps, and Shopping. These websites also have search facilities that are powered by Google.
  • In your ad settings, you have the option to include “search partners.” With this setting enabled, your ads will have expanded reach and may also appear in other search engines such as AOL,, and many other alternative search engines partnered with Google.

PPC ads on the Google Search Network are activated whenever a prospect performs a search on Google using a particular set of keywords. As mentioned, the paid ads will appear on top (or bottom) of the search engine results page along with the organic results.

Google Display Network

As previously pointed out, Google Display Network has nothing to do with Google Search. Instead, your ads may appear on more than 2 million Google partner websites.

  • This collection of websites includes specific Google websites such as Google Finance, YouTube, Gmail, and Blogger.
  • Other than websites, the Display Network also includes mobile sites and apps.

While Google Search Network ads are excellent for reaching audiences who are far into the buying journey, they are exclusively text-based so they don’t exactly stand out. On the flip side, Google Display allows advertisers to be more creative with their ads, extend their reach to new customers, and increase brand awareness.


Search Network VS. Display Network: Key Takeaways

1. Each Network Requires Different Ads

When a user is searching in Google for a product or service, you can say that there’s a need or intent. For instance, if someone searches for the keyword “nashville SEO company,” isn’t it obvious that this person is looking to hire an SEO digital marketing agency? I mean, why would you search for that phrase in Google if not?

With that said, you should ensure that your ad copy for Google Search Network matches the searched keyword. If not, you’ll be wasting everyone’s time who’s searching for that phrase, not to mention your own advertising bucks.

Pretty simple, right?

On the flip side, consider a user who’s reading articles about the benefits of SEO and how to implement SEO best practices. It’s clear that the user wants to use SEO as a marketing strategy but it’s not obvious that he needs a digital marketing agency. He might work in-house at an organization and be researching it for an internal project. The user isn’t actively seeking a product or service, but he might be receptive to advertisements that relate to his situation.

Therefore, your Display Network Ad must make a case that working with an SEO company is the best option if he wants to have a successful SEO campaign.

Can you see the difference?

From these two examples, it’s clear that your ad for the Search Network will be different when compared to your Display Network ad copy. Using a single strategy for both Search and Display networks can only spell disaster for your advertising efforts.

2. Each Network Requires Different Targeting

The beautiful thing about Google Ads is that you can tweak your campaigns to target exactly the demographic that you want.

In a standard Search Network ad campaign, your main target is to use keywords. Whenever a prospect searches for your targeted keyword, your ad has a chance to be displayed depending on a number of factors (more on that later).

With a Display campaign, you have several options.

First, you have behavioral targeting. This targeting method will display your ads to users based on their web browsing history. Therefore, if the user has searched for SEO strategies before, there’s a chance that your ad for an SEO company will be displayed.

Another option is contextual targeting. This is the most basic targeting option in the Google Display Network. Basically, Google will try to match your target keywords and ads to relevant pages within its expansive network.

The last option is demographic targeting. With this, you can target demographics based on gender, age, and many other parameters. It’s a great method to precisely target your ideal customers.


Google Ads Auction: How It Works

Whenever a user submits a search query on Google, it quickly determines which ads the user should see. Google uses the auction system to instantly identify which ads should be displayed. The overall result is determined by the Ad Rank that Google assigns to your adverts. If you want to succeed in this space, you should know the factors that will help you get to the top of the SERPs.

The three primary factors that affect your ad position are:

  • Your bid
  • Ad Quality Score
  • Ad Extensions

Your Bid

Google Ads is comprised of an auction system that lets you bid for the keywords you desire. Fortunately, you only pay whenever a user clicks on one of your ads. Your bid refers to the maximum price that you are willing to pay for a single click on your ad. For reference, the average cost of a Google Ads click is $1-$2.

You’re probably asking, “is it really that simple? Why not just bid your way to the top of the SERPs?” Well, it’s not that easy! The Google Ads auction system is designed in a way that you can’t simply win by being the highest bidder. Google is in the business of delivering the best and most relevant content to its users, so there are other factors that come into play.

Ad Quality Score

Perhaps the most important factor here is your Ad Quality Score. The Quality Score is the metric used by Google to evaluate ads with regards to their overall quality and how relevant they are to the users. To see your Quality Score, you just need to hover to one of your keywords.

Your ads are graded from 1 to 10 (10 being the best). Below are the three factors that affect Quality Score:

  • Ad Relevance: This is the correlation between your targeted keywords and the actual content you use in your ad copy. The idea is that your ad should answer questions that users have while entering their queries.
  • Landing Page Quality: When a user clicks on your ad copy, make sure that it’s relevant to the landing page. Users don’t like to be misled, nor does Google. Tip: Your sites and landing pages should be mobile-friendly.
  • Expected Click-through Rate (CTR): This metric refers to your historical CTR data. Thus, it always pays to optimize your ads for better CTRs.

Ad Extensions

One of the best ways to improve your CTR is to make use of Ad Extensions. This refers to the set of features that make your ads bigger, more informative, more compelling, and more clickable. The best part is…

It won’t cost you anything!

Extensions enhance your ad with additional information that gives you a better chance of gaining business. And yes, improve your CTR as well. Extensions include additional information like call buttons, phone numbers, address, links to specific links on the website (like your order form), additional text, and many others. Remember to use extensions that align with your goals.


How Much Will You Actually Pay?

With the way the auction system works, your actual cost per click (CPC) may be less than your maximum bid. This is why I always tell my clients to focus on the quality of their ads rather than the actual bidding.

Let’s look at this example. There are three businesses competing for the top position above the SERP. Two of them have met the minimum threshold of 40 and now they are direct competitors. If one advertiser has a higher Ad Rank, they’ll end up paying the same price are the previous ad ranking advertiser + $0.01, the least billable amount.

So, in the end, the top-ranking advertiser only needs to pay enough to beat the competition.

At the end of the day, how much you’ll actually pay depends on a combination of factors. Again, your maximum bid doesn’t guarantee you a higher position. This is Google’s way of encouraging advertisers to focus more on the content of the ads, which ensures that the best relevant content is delivered to their users.


3 Tips to Optimize Google Ads

1. Mind the Ad Quality Score

Your Ad Quality Score is the most important metric for your ads. Many advertisers can spare the big bucks for high bids but it won’t do them any good if their Ad Quality Score isn’t up to par. Keep in mind: it’s not just the relevance of your ads but also the quality and suitability of your landing page as well.

2. Add More Extensions

Ad extensions are a surefire way to increase your adverts’ CTR, which will lead to more clicks and conversions. According to Google, the CTR can increase up to 10-15% by simply using extensions. Ad extensions will entice users to click by giving direct and easy access to the information that they’re looking for. For example, if a user is searching for a nearby Asian restaurant, a good ad extension to add is the direct link to your restaurant’s menu.

Other good extensions that you should consider adding are product information, phone number, address, business hours, just to name a few.

3. Keep Your Keyword Groups Tight

It can be tempting to throw as many keywords as you can to a single campaign. After all, the wider you cast the net, the more fish you’ll catch, right? Not exactly!

When it comes to Google Ads, it’s always best to focus on quality over quantity. What’s the point of getting thousands of impressions if they can only result in a few clicks? A smaller keyword group gives you better control and enables you to create ad copy that resonates with your target audience.


Now You Know the Basics

Google Ads is one of the best, if not the best way to drive qualified traffic to your website and attract good-fit customers. However, it’s easy to waste your time and money with Google Ads and that usually happens when you’ve got no clue about what to do.

Hopefully, this guide on how Google Ads work has helped you understand the platform, even if it’s just on the basic level. If you have any questions or need any help with your PPC campaign, feel free to contact us here at Atlantic Digital Marketing.


Leave a Reply