What is Google Ads? How Does Google Ads Work?

If you’re considering investing some money in ads to reach your targeted audience, it’s important to spend it in the right place – like Google Ads. In this article, we’ll delve into what Google Ads is and how it works.

Google Ads was launched two years after the creation of the immensely popular website, Google.com. Originally introduced as Google AdWords in October 2000, the advertising platform underwent rebranding in 2018 and became known as Google Ads.

So, let’s explore what Google Ads is and what key insights we need to kickstart advertising on Google.

Here, we’ll be covering specific features that will help you optimize your campaigns for the best results.

What is Google Ads?

There’s no doubt that the stronger and more focused your paid campaigns are these days, the more they’ll generate clicks, increasing the probability of gaining new customers.

This is why Google Ads is becoming rapidly popular for individuals across industries. Google Ads is a paid advertising platform that falls under the pay-per-click (PPC) marketing channel. Here, you, as the advertiser, pay for each click or per impression (CPM) of an ad.

Google Ads offers an effective way to drive qualified traffic for your business. It enables you to boost website traffic, receive more phone calls, and increase store visits. Google Ads allows you to create and share well-timed ads with your target audience through both mobile and desktop platforms.

In essence, your business will appear on the search engine results page (SERP) at the very moment when your ideal customers are searching for products and services similar to yours through Google Search or Google Maps. This way, you can reach your targeted audience when they are actively looking for products or services you provide.

Why Should You Advertise on Google?

Google is the most widely used search engine, receiving 3.5 billion search queries daily. According to Google, advertisers who invest $1 in Google Ads typically earn $8 in return. If you’re using pay-per-click (PPC) for your products and services, Google Ads should be a fundamental part of your advertising strategy, as it’s nearly indispensable aside from excluding Facebook.

Countless companies utilize Google Ads to promote their businesses, indicating that even if you’re ranking well in organic search results, these ads can still place you beneath your competitors on the page. This is because Google prioritizes Ads at the top for any given keyword. Therefore, if you’re not leveraging Google Ads, reaching your targeted audience effectively can become challenging.

Google Ads Terms

These common terms will assist you in setting up, managing, and optimizing your Google Ads campaign. Some of these terms are specific to Google Ads, while others are generally related to PPC. Familiarizing yourself with these terms is essential for running an effective ad campaign.

Your AdRank determines your ad placement. The higher its value, the better your rank, and the more likely people will see and click on your ad. Your AdRank is calculated by multiplying your maximum bid by your Quality Score.

Google Ads operates on a bidding system where, as an advertiser, you select the maximum bid amount you’re willing to pay for each click on your ad. The higher your bid, the better your placement. You have three bidding options:

  • CPC (Cost-Per-Click): The amount you pay for each individual click on your ad.
  • CPM (Cost Per Mille): The amount you pay for one thousand ad impressions, meaning when your ad is seen by a thousand people.
  • CPE (Cost Per Engagement): The amount you pay when a predetermined action is taken on your ad.

Understanding these terms is crucial for effectively managing your Google Ads campaign.

Campaign Type

Before starting a paid campaign on Google Ads, you’ll need to choose one of these three campaign types: search, display, or video.

Search ads are text-based ads that appear on Google’s search results page.

Display ads are usually image-based and are shown on web pages within the Google Display Network.

Video ads are between 6 to 15 seconds long and appear on YouTube.

Click-Through Rate (CTR) CTR is the percentage of views an ad receives that result in clicks. It indicates how many people out of the total viewers of the advertisement actually clicked on it. CTR is used to measure the efficiency of an ad.

Conversion Rate (CVR) Also known as Conversion Rate, CVR shows the relationship between the number of people who interacted with an ad and how many performed the desired action.

To calculate it, divide the total number of conversions by the total number of views or clicks.

Display Network

Google Ads allows your ads to be displayed within a web page, either on the search results page or on Google’s Display Network (GDN).

The GDN is a network of websites that offer space for Google Ads. These ads can be text-based or image ads and are displayed alongside content that is relevant to your target keywords. Google Shopping and app campaigns are popular options for Display Ads.


With Ad Extensions, you can supplement your ad with additional information without any extra cost. These extensions fall under five categories: Sitelink, Call, Location, Offer, or App.


When a Google user types a search query into the Google search field, Google displays search results that fulfill the user’s intent. The words or phrases that the user types into the search field to find what they’re looking for are called keywords.

Keywords are words or phrases used by users to search for information on search engines. For your ads, you need to select keywords that you want your ads to show up for.

For instance, if you offer online classes for SEO, you’d want your ad to show up in the search results when a user searches for “online SEO class.” In this case, “online SEO class” is the keyword you would choose for your campaign.

PPC (Pay-Per-Click)
Pay-Per-Click, or PPC, is an advertising model where the advertiser pays for each click their ad receives. PPC is not exclusive to Google Ads; it’s one of the most common types of ad campaigns used across platforms.

Before you start your first Google Ads campaign, it’s essential to understand the pros and cons of PPC.

Quality Score (QS)
Quality Score assesses the quality of your ads based on your click-through rate (CTR), taking into account the relevance of your keywords, the quality of your landing page, and your past performance on the search engine results page (SERP).

QS plays a significant role in determining your AdRank.

How Does Google Ads Work?

Google Ads displays your ads to customers who are interested in your products and services.

Advertisers bid on search terms or keywords, and based on that bid, their ads are placed in various locations depending on the type of ad campaign chosen, such as YouTube videos or at the top of search results pages on relevant websites.

Several important factors impact your ability to create effective and high-performing Google Ads:

AdRank and Quality Score
AdRank determines the placement of your ads, and Quality Score is one of the factors (along with bid amount) that determines your AdRank.

Ad Campaign Types: Search, Display, and Video
You can choose one of three types of campaigns on Google Ads: search, display, or video.

Search Ads: These are text ads displayed on Google results pages. For example, when someone searches for “online SEO classes,” sponsored results or ads related to that query are displayed.

Display Ads: These ads are typically image-based and are shown on web pages within Google’s Display Network.

Video Ads: These short video ads, usually between 6 to 15 seconds, appear on YouTube.

Click-Through Rate (CTR)
CTR is the percentage of views on your ads that result in clicks. It measures the effectiveness of the ad in enticing users to click.

Conversion Rate (CVR)
CVR, or Conversion Rate, is a metric that indicates how many users take a desired action after seeing your ad.

Keywords are the words or phrases that users type into the search engine to find products or services. Selecting relevant keywords for your ads is crucial for reaching your target audience.

Ad Extensions allow you to add extra information to your ads without additional costs. They provide users with additional information and options related to your ad.

Overall, Google Ads works by creating ad campaigns based on keywords, bidding on ad placements, and utilizing various ad formats to reach your target audience effectively.

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