Ad Auction

What is the ad auction?

The ad auction is the process Google uses to decide, for every single search query, which ads appear, in what order and at what price. It runs in fractions of a second, in the order of 200 milliseconds, and it runs again from scratch every time. There is no position you can buy permanently.

How the auction sorts

Google collects every ad that could match the search query and sorts them by Ad Rank. Simplified: Ad Rank = bid × quality. Because the bid is multiplied by quality, the highest bidder regularly does not win: a relevant ad with a matching landing page can overtake a considerably higher bid.

What you actually pay

Your maximum bid is a ceiling, not an invoice. You only pay as much as it takes to defend your place against the next bidder. That is why a better Quality Score works twice over: it lifts your position and at the same time lowers the click price you really pay.

What you can influence in the auction

• Expected click-through rate: ads that pick up the search query word for word
• Ad relevance: clean separation by topic instead of one ad group for everything
• Landing page: fast, unambiguous and matching what the ad promised
• Bid control: Smart Bidding bids anew for every auction, but needs clean conversion tracking to do it

Pro tip: whoever only turns the bid dial buys the position expensively. From my practice, working on ad and landing page is the cheaper way up, because it improves position and price at the same time.

Further resources

• The Google Ads auction: who wins and who pays what
• Improving your Quality Score
• Auction Insights