How Google AdWords Auctions Work

Google AdWords is one of the absolute best traffic sources for high volume, high quality traffic.

If you're going to advertise on Google AdWords it's really important that you understand how the Google AdWords auctions actually works.

While AdWords is an amazing advertising platform, it's VERY competitive and expensive. Understanding the mechanics of the AdWords auctions is essential for your success in the platform.

Benefits Of Understanding How The AdWords Auction

Here are just a few of the many benefits you'll get from taking the time to learn how Google runs their AdWords auctions:

• Understand how to rank your ads higher (ad rank).
• Know how to decrease your CPCs (cost per click).
• Understand what Google is looking for and how to stay compliant.
• Learn how you can get your ads ranking higher than your competition even though your competitor is bidding higher than you.
•  How to structure your campaigns, ad groups and keywords so that they have the highest CTR (click-through-rate), conversions and quality score.

Instead of making a video explaining how the auction works, Hal Varian (Chief Economist at Google) does the job better than probably I ever could, so have a watch.

​Watch the video below:

Video Timestamp:

​0:29 - Google's main purpose in AdWords. This will help you understand, and possibly even predict, future changes Google will make in the future.
0:37 - Sample walkthrough a traditional Adwords auction​. 
1:37 - Explains how much you'll pay per click.
1:99 - Explanation why Google wants to show users relevant ads.
2:10 - Expected clickthrough rate. 
2:32 - Landing page experience. 
2:44 - Highly quality landing page checklist. First, relevant and original content. Second, easy to navigate. Third, transparent regarding the nature of our business; how your site interacts with the visitors computer; and how you intent to use the visitors personal information. 
3:00 - Ad relevance. Google analyzes language in the ad in relation to the query. 
3:30 - Ad formats. 
3:52 - Ad Rank. What is it and how to calculate it.
6:19 - How advertisers can influence cost per click and ranking in the auction.
7:43 - Why Google handles Ad Rank and pricing the way they do.
8:03 - How to contact Google if you have more questions or want more information. Go to adwords.google.com/support