Why Understanding the AdWords Bidding Process Is Crucial to Driving Revenue


We know Google AdWords is a tool driven to help advertisers optimize their products on the Google Search Network. And the potential to be successful with the tool is absolutely tremendous—but a fundamental part of obtaining that success is understanding the bidding process. Like any other AdWords goal, you must have a strategy that is in alignment with that goal.  So if you have a particular  bidding  goal, your  bidding  strategy must be aligned so you can attract more visitors. And so the first part of creating this alignment between strategy and goal is to understand the basics of the  bidding process itself .   Read below to grasp these basics so you can start generating the results you’ve been waiting for all this time.

How does the bidding process work?

As we’ve mentioned in previous posts, an extremely important aspect of your AdWords success is matching your bidding strategy with your individual AdWords goals. For example, if you want to broaden your brand visibility, you must focus on your CPM bidding (cost per thousand viewable impressions). And if you want more downloads or purchases, use  cost-per-acquisition bidding which focuses on conversions.  You can either do automated bidding which creates a daily budget that AdWords will adjust your CPC bids for or you can do manual bidding which sets bids at the ad-group level, AdWords placements, or individual keywords  and gives you greater control over your ad-campaigns.

For each of these variations, the metrics may be different but the bidding process remains the same. Google chooses whether there will be an auction based on the popularity of certain search queries that are made by web browsers. If the demand is high enough, there will be an auction which advertisers have already determined keywords, amount spent, and the keywords that will be matched with certain ads in the AdWords system. Google determines which ads will be shown based on your ad rank—which is composed of maximum bid and your quality score. And the price which you pay is determined by the below equation:

YOUR PRICE = The ad-rank of the Person Below You/ Your Quality Score +$.01

So how do you get a higher rank as a result of this understanding? Simple. You become a more successful bidder. You understand the in’s and out’s enough to place a successful bid and reap the benefits of it. For example, you don’t necessarily need to have the highest price to win the bid if your quality score is strong enough—which consists of factors like CTR, relevance, and landing pages. So having this understanding before you actually move forward with the bidding process puts you at a major advantage. You may want to optimize your landing pages with compelling graphics and create headlines with strong  call to actions . You may want to construct the text in your ads to attract more visitors to improve CTR. Maybe you want to use  keyword modifiers to broaden the range of phrases or words which will trigger your ads in search queries .

Whatever the case may be, understanding how the bidding process works is crucial to your success with the account overall. It gives you insight into what needs to be done to take your strategies to the next level. Why? Because there is no better way of gaining the attention of the huge pool of potential prospects that exist than winning the actual bid. And with there being so much competition, it’s crucially important to be the number one option in the mind of your target audiences. Because you just cannot afford to lose that bid. There’s too much to lose.

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