How Do PPC Ad Auctions Work?
The web is the most incredible invention ever made by humans. Not only does it connect people from all around the world but the technological advancements made every day have affected the world as a whole. One such prominent example is marketing. Marketing is all about promoting a business and the services offered.
As a business or service provider, you need to generate leads and turn them into business opportunities. One effective way to do this today is through internet marketing, which includes placing ads on websites, blogs, and social media pages. However, you need to pay for advertising and PPC is the most common method of payment.
What Is PPC?
PPC stands for pay-per-click, a type of internet marketing where the advertiser pays a small fee every time their ad gets clicked on. However, this is subject to certain terms and condition.
Under this type of marketing, an advertiser places an ad related to his/her business on the web. Search engine advertising is the most common type of PPC marketing. This method allows the advertiser to bid on the placement of their ads in the sponsored link search engine like Google. So, every time a visitor clicks on an ad, which leads them to the website of the advertiser, they need to pay a fee to the search engine sponsored link.
How Does PPC Bidding Work?
PPC bidding works precisely like a traditional auction, wherein you try to outbid for a product that you like. Similarly, in a PPC ad auction, as an advertiser, you bid on a specific keyword relating to your ads to appear in search engine. The most common question that determines the auction is how much you are willing to pay per click. In addition to this, other factors affecting auction includes advertisers eligible for the auction and order in which the eligible ads appear on a page.
Google is the single largest platform offering PPC ad auction service. The working of an ad auction is as follows:
- When someone searches for a keyword, then Google finds for all ads that are relevant to it.
- Out of these ads, it filters out the ones that are not eligible, like the ones that are in violation of the prescribed policy.
- And out of the remaining ads, Google displays only those ads that have a high ranking.
How Are Ad Rankings Determined?
Google uses ad quality score to decide the rank. The quality score is an important factor for determining which ads will appear and what will their respective order be. Google rates an ad on the scale of one to ten. Quality score is determined based on expected click-through rate, ad relevancy, and landing page experience. This score determines the cost per click (CPC) to be paid by the advertiser. An ad with a higher quality score may result in lower CPC.
In simple terms, it can be said that the working of a PPC ad auction is a process that Google follows to decide which ads appear for specific keyword search and also the order in which these ads appear.
Free analytics audit.
Sign up and we’ll contact you to run a free analytics audit for your website and digital marketing channels.