In 2019, Google generated $134.8 billion exclusively on advertising. The company generates ad revenue through its Google Ads platform, allowing advertisers to promote their products and services through a broad Google Display Network.

 

Advertising revenue traditionally accounts for the largest share of Google's total revenue, which was $160.7 billion in the same year. Thus,  2019 Google Ads earnings accounted for 70.9% of the company's annual income.

 

It all starts with googling

When someone searches for something on Google, the Artificial Intelligence analyzes the pool of eligible Google Ads advertisers to determine if there will be an auction.

If one or more advertisers bid on keywords that Google considers relevant to the search query, an auction is triggered.

Specific keywords (for example, “pet medicine”) can participate in ad auctions with a wide variety of user searches (such as, “dog medicine” or “pet health kit”), depending on your match type.

 

What ads participate in the auctions?

Advertisers define the keywords they want to bid on, how much they want to spend, create groups of those keywords, and associate them with their ads. Then Google takes presumably the most relevant keyword and the corresponding ad and lets it go through the ad auction with the maximum entered bid.

You can participate in a particular ad auction only once.

 

How does Google determine where to show a certain ad?

Once your ad has entered an auction, Google evaluates two key metrics: your maximum bid and your Quality Score. These two factors determine where your ad will appear.

CPC bid is the maximum amount you are willing to pay for a click, and you specify it for each of your keywords.

Google Ad Quality Score is a metric for determining how relevant and useful your ad is to the user (components-CTR, relevance, etc.).

The ad with the best combination of CPC bid and Quality Score gets the best position.

 

Summary

Not only your ad quality but also your landing page quality determines the position of your ad. Many entrepreneurs cut down their expenses by creating landing pages with the help of free website builders. Unsurprisingly, that is a common cause of not being profitable for them to advertise their products or services in Google Ads.

 

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