One of the most enduring misconceptions about search engine marketing is that whoever has the largest advertising budget wins. Although a larger advertising budget can certainly be advantageous, especially when targeting highly competitive keywords, it’s far from a requirement for success with search engine marketing. This is because all ads go through a process known as the ad auction before appearing alongside search results. For the purposes of this explanation, we’ll be focusing on the ad auction in Google AdWords.
How the Ad Auction Works
The ad auction process takes place every single time someone enters a search query into Google. To be entered into the ad auction, advertisers identify keywords they want to bid on and state how much they are willing to spend (per click) to have their ads appear alongside results relating to those keywords. If Google determines that the keywords you have bid on are contained within a user’s search query, your ads are entered into the ad auction.
How Ads ‘Win’ the Ad Auction
Not every single ad will appear on every single search. This is because the ad auction takes a variety of factors into account when determining the placement of ads on the SERP, and because not every keyword has sufficient commercial intent to justify displaying ads next to results. However, the two main factors that Google evaluates as part of the ad auction process are your maximum bid and the Quality Score of your ads.
Maximum bid is the maximum amount you have specified you are willing to pay for a click. Quality Score is a metric based on the overall quality of your advertisement. Google calculates these metrics during the ad auction to determine the placement of advertisements. The result of this calculation is known as ad rank.
The Importance of Quality Score in SEM
Given that Google AdWords’ Quality Score comprises half of the ad rank formula, it is one of the most crucial metrics search engine marketers can focus on. High-Quality Scores can help you achieve better ad positions at lower costs because Google favors ads that are highly relevant to user queries.