Google Ads is Google’s online advertising platform that lets businesses show ads across Google Search, YouTube, Gmail, Google Discover, Maps, and millions of sites and apps in the Google Display Network. It helps reach people at different stages—from actively searching to passively discovering—using various campaign types like Search, Display, Shopping, Video, App, Performance Max, and Demand Gen.
How Google Ads Works
At its core, Google Ads runs a lightning-fast auction every time someone searches on Google or visits a Google property where ads can show. In this auction, Google decides:
- Whether an ad is eligible to show.
- In what order ads appear (Ad Rank).
- How much each advertiser pays per click (Actual CPC).
This decision is based on two big pillars: what an advertiser is willing to pay (bid) and how relevant and high-quality the ad experience is (quality).
The Google Ads Auction: Bid + Relevance = Results
- Ad eligibility and position are determined by Ad Rank, which is calculated for every auction and is influenced by the bid amount, ad and landing page quality, expected impact of assets (extensions), and context like user device, location, and time.
- Higher quality doesn’t just improve position—it can also lower costs, because you pay just enough to beat the next competitor (a second-price-like mechanism).
- Practically, that means improving relevance and user experience can let ads win with lower bids—and pay less per click for better placements.
Google evaluates Ad Rank in each auction to determine eligibility and position, factoring in quality and thresholds—so the highest bid alone doesn’t guarantee the top spot.
Quality Score: The Relevance Engine
Quality Score is Google’s diagnostic view (1–10) of how relevant and useful ads are compared to others, based on three components: expected CTR, ad relevance, and landing page experience. It influences Ad Rank and CPCs: higher quality can improve positions and reduce costs.
- Expected CTR: Likelihood the ad will be clicked when shown.
- Ad relevance: How well the ad matches the user’s intent.
- Landing page experience: Relevance, usefulness, speed, and ease of use on the destination page.
Improving landing page experience and ad relevance can directly boost performance by raising Quality Score and lowering CPCs.
What Determines What You Pay (Actual CPC)
You don’t usually pay your maximum bid. Instead, in a second-price-style auction, the amount paid per click is the minimum needed to maintain your position over the next competitor, adjusted by quality and thresholds. This is why a better-quality ad can pay less than a lower-quality ad in a higher bid scenario.
Campaign Types: Choose the Right Format and Placement
Campaign type determines where ads appear, formats used, and available features.
- Search: Text ads on Google SERPs triggered by keywords and intent; great for high-intent leads and sales.
- Display: Visual ads across millions of sites and apps; effective for reach and remarketing.
- Shopping: Product-rich ads with images, price, and merchant info on SERP and Shopping tab; powered by Merchant Center feed.
- Video: Ads on YouTube (in-stream, in-feed, Shorts); strong for awareness and consideration.
- App: Promotes app installs and in-app actions across Search, Play, YouTube, and Display with automated targeting and bidding.
- Demand Gen: Visually engaging ads across YouTube, Discover, and Gmail to build interest and nurture demand in upper/mid-funnel.
- Performance Max (PMax): One campaign that uses Google AI to serve across all Google channels to maximize conversions for your goal.
As of 2025, these seven types cover most objectives, with Demand Gen replacing Discovery and PMax unifying inventory access under one goal-based campaign.
Why Relevance Matters So Much
- Better relevance improves Quality Score, which improves Ad Rank and reduces CPCs—meaning more clicks for the same budget.
- Google explicitly highlights expected CTR, ad relevance, and landing page experience as the core signals for quality.
- Enhancing landing page speed, message match from keyword to ad to page, and clarity of the path to action measurably improves outcomes.
Putting It All Together: A Simple Mental Model
- User searches or browses a Google property.
- An auction runs among eligible ads.
- Google calculates Ad Rank using bid, quality, and context.
- Ads with sufficient Ad Rank show in order; actual CPC is the minimum required to beat the next competitor, influenced by quality and thresholds.
- Higher quality means better positions and lower costs over time.
Quick Tips to Win More With Google Ads
- Align keyword intent, ad messaging, and landing page promise to improve ad relevance and landing page experience.
- Optimize for expected CTR with clear headlines, strong CTAs, and tight keyword-to-ad grouping.
- Improve page speed and mobile usability to lift landing page experience.
- Choose campaign types that match goals: Search and Shopping for demand capture; Demand Gen and Video for demand creation; PMax for full-funnel conversion goals.
By focusing on both the bid and the user experience, advertisers can consistently improve Ad Rank and pay less per click while driving better results.
