How do Google Advertising Work?
Google Advertising can be an extremely effective lead and sales generation machine, and the numerous features, customization, and targeting options it provides are just a few of the reasons why. However, what has contributed to its phenomenal success is also the same factor that can limit the ROI. The default recommendations that Google suggests when setting up a campaign are frequently costly mistakes that you want to avoid.
How do Google Advertising Work?
Google Ads operates under a pay-per-click (PPC) model. That means marketers target a specific keyword on Google and make bids on the keyword — competing with others also targeting the keyword.
The bids you make are “maximum bids” — or the maximum you’re willing to pay for an ad.
For example, if your maximum bid is $4 and Google determines that your cost per click is $2, then you get that ad placement! If they determine that it’s more than $4, you do not get the ad placement.
Alternatively, you can set a maximum daily budget for your ad. You’ll never spend more than a specific amount for that ad per day, helping you get a better sense of how much you should budget for your digital ad campaign.
The idea is that the more users click on a marketer’s advertisement, the more likely they will accomplish the advertisement’s goals (e.g. become a lead, make a purchase).
Marketers have three options for their bids:
- Cost-per-click (CPC). How much you pay when a user clicks on your ad.
- Cost-per-mille (CPM). How much you pay per 1000 ad impressions.
- Cost-per-engagement (CPE). How much you pay when a user performs a specific action on your ad (signs up for a list, watch a video, etc).
“Quality Score is an estimate of the quality of your ads, keywords, and landing pages. Higher quality ads can lead to lower prices and better ad positions.”
-Google