PPC Guide How the ad auction works?

In this next installment of our [PPC Guide]we’re going to dive into how ad auction actually works.

The Search engines don’t show ads for every query, but when the engines determine a query has commercial intent (a user is looking for information about a service or product), an auction takes place as soon as the user submits their query.

A variety of factors determine:

  1. An advertiser’s eligibility for the auction.
  2. The subsequent order in which eligible ads appear on the page.
  3. How much each advertiser will pay if their ad is clicked.

Your bid. The first factor is how much an advertiser is willing to pay for a click. Advertisers set a maximum bid (called Max CPC) that they’re willing to pay. Bids can be set at the individual keyword level or at the ad group level (a grouping of related keywords).

Your relevance. The search engines aim to show ads that users will actually want to click on. If ads are relevant, users have a bad experience and the engines miss out on revenue from ad clicks. That’s where the second factor of ad relevance comes in.

An ad’s Quality Score is a combination of relevancy factors that we’ll get into below. When an ad is eligible for the auction, the engines perform a calculation: Max CPC X Quality Score = Ad Rank. That determine where an ad will show on the page.