How Does Google AdWords Work?

Google AdWords described in simple words is Google’s online advertising service, which can be used by businesses to display their ads on Google and its advertising networks. It has turned out to be Google’s main advertising revenue earner, earning $94.5 billion in 2017.

What is AdWords


AdWords is an online advertising service provided by Google, where the advertisers can bid for certain keywords which lead the audience searching for that keyword to the advertiser’s advertisement. The advertiser can set a budget when advertising through AdWord program and has to pay only when someone clicks on the ad.

How Does AdWord Work

The advertiser can select a keyword, and when that keyword is searched in Google, few results get displayed in SERP which include your ad also.  The top ads or the ads on the right side under the heading “Sponsored Links” are the AdWord ads. In case someone searching the keyword clicks on your ad amongst those AdWord ads, he gets directed to your website, and you get traffic for your website.

Every time someone clicks on your ad in AdWords, you have to pay some fixed money to Google. But you cannot be the only one bidding for that particular keyword, there can be few others also bidding for the same keyword. So you have to bid against your rivals.

To make sure your ad appears when the keyword is searched, you got to bid higher than the ones who are bidding on the same keyword. There are more chances that your ad will appear in AdWord ads if you bid higher for pay-per-click (PPC).


However, high bidding is not the only parameter which decides if an ad appears in AdWord or not. There is also something of crucial importance called the quality score.

Google loves its users so much that it does a thorough check before displaying an ad in AdWords. It checks:

  • How much relevant your landing page is to the key term searched.
  • How much useful your ad is to the user with respect to the keyword searched.
  • It also checks how much was your CRT (Click Through Rate), or the number of clicks your ad received previously.

Based on these factors Google calculates the quality score for your ad. The higher the quality scores for your ad, the better it is. Matter of fact, even if your rival’s bid is higher than you, but your quality score is higher than your rival’s quality score, there are pretty fair chance of your ad being displayed higher in Google AdWord ads.

Another factor which determines the ranking of your ad in the AdWord system is the competitiveness of your keyword.



CPC stands for cost-per-click and CPM stands for cost-per-thousand impressions.  In AdWord advertising system, every time some searcher clicks on your ad, you pay the amount, and the amount you pay is called cost-per-click. Its value is relative, in other words, it depends on the other bidders for the same keyword and it always has to be lower than the highest bid made for that particular keyword. The method employed for calculating CPC is pretty simple – the competitor bellow’s ad rank gets divided by quality score plus 0.01 USD.

There is also available the automatic option combined with highest bid amount. The AdWord system on its own chooses the bidding amount for you and tries to bring in maximum click on your ad for the given budget.

CPC is the most popular bidding system by various advertisers. But there is another mechanism of bidding which can be used, called CPM.

In CPM mechanism you pay to Google for every one thousand your ad gets displayed in search results for the particular keyword. In CPM, the number of times your ad in AdWords gets clicked and the searcher actually lands on your advertisement is not taken into consideration.

Anyone of the two systems you can use, suiting your advertisement’s specific needs.

Keyword Selection

Keyword Selection

Keywords in Google AdWords can be described as small phrases or the words on which the bidder bid hoping the searcher will reach their advertisements when a searcher searches for those keywords in the Google search engine. Google employs few techniques for matching the keywords you have bid upon to the terms searched.

Broad Match: Reaches all the searchers when the particular keyword is searched. Google takes care that it reaches even if has spelling mistakes by the searcher.

Broad Match Modifier: Plus sign gets added to the broad match keyword.

Phrase Match: AdWord ads show if an exact or close variant of the exact phrase is searched, even if has few words added at the start or after the phrase. But words should not be included in the middle of a phrase.

Phrase Match: Ads show is SERP when a searcher types the exact term or very near to exact term.

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