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How do PPC ad auctions work (including the Google Ads auction)?

Short answer

Google runs an auction for every search. It finds ads whose keywords match, removes ineligible ones, then ranks the rest by Ad Rank. Ad Rank combines your bid, ad quality, minimum thresholds, the searcher's context and the expected impact of ad assets. A highly relevant ad can win a higher spot at a lower price.

In this answer
  1. 01The auction step by step
  2. 02What goes into Ad Rank
  3. 03Why quality matters so much
  4. 04What this means for your budget

The auction step by step

What happens for every search
  1. MatchGoogle finds ads with keywords that match the search.
  2. FilterAds for other areas or with policy problems drop out.
  3. RankEach remaining ad gets an Ad Rank score.
  4. ShowAds above the thresholds show in Ad Rank order.

Because the auction runs for every search, results change constantly. Your position for the same keyword can differ from one search to the next, depending on who is bidding at that moment.

What goes into Ad Rank

FactorWhat it means
BidThe most you are willing to pay
Ad qualityExpected CTR, ad relevance and landing page experience
ThresholdsMinimum quality needed to show at all
ContextLocation, device, time and the exact search
Asset impactHow calls, sitelinks and other assets might help

Why quality matters so much

Google states that relevant keywords and ads can win a higher position at a lower price. Two advertisers with the same bid can land in different spots. The better ad and page win and often pay less per click. The actual cost is what it takes to hold the position.

What this means for your budget

Raising bids is the expensive way to win auctions. Improving relevance is the cheap way. Write ads that mirror the search, send clicks to a matching page and add assets like call buttons and sitelinks.

Good example. A roofer's ad for "roof leak repair" uses those words in the headline and lands on a leak repair page. It outranks bigger competitors bidding more.

Bad example. A roofer bids high with a generic "Quality Roofing Services" ad that points to the homepage, and pays more for lower spots.

Read what Ad Rank is. Our Google Ads management wins auctions with relevance before budget.

Keep reading

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