Google AdWords Bidding Process

Google AdWords Bidding ProcessBy: Kumar Abhishek

Google AdWordsGoogle AdWords is an online advertising service where advertisers pay to display brief advertising copy to web users. Google AdWords' system is partly based on cookies and keywords predefined by the advertisers. Web pages from Google and from partner websites are designed to allow Google to select and display the advertising copy selected. Advertisers pay when users divert their browsing to seek more information about the copy displayed, and partner websites receive a portion of the income that is generated.

Bidding SystemAdvertisers choose which keywords they would like to target and set price they are willing to pay for single click from that keyword (Which is known as Pay per click).

The same bid is compared to other advertisers bidding on the same keywords in same locations

Comparison among the BiddersComparison is done on the basis of Ad-rank of your advertisement which is determined by certain factors.Quality Score.Yourclick-through rate(CTR):The relevance of each keyword to its ad group.Landing page quality and relevance.The relevance of yourad text.Your historical AdWords account performance.

Ad extensions: Basically the Ad format youre providing to google to place your ad.

A Walk Through

How to Set a bid?Setting a Bid depends on these factors:Conversion Rate:- A conversion happens when someone clicks your ad and then takes an action that youve defined as valuable to your business, such as an online purchase or a call to your business from a mobile phone.Calculation: (Total Clicks on Ad) / (Total Impressions) = Click Through Rate.This value is also available by google analytics provided you are an old user or via browsing similar ads.Life time Value:It is Important to understand how much each new customer is worth on an average.Nature of Business.

Continued

Conversion Rate x Life time value = Suggested Starting Bid

Walk through

AdWords UI

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