How Google Adwords Works
In the good old days, when the internet was young, a business owner could buy an ad on Google Adwords and appear on the first page of Google for minimal cost and a reasonable return on investment (ROI). Now everyone is moving online and so Google has to start ranking their ads similar to how they rank organic search results. Thus, the first way that SEM works is through a bidding system.
When you use Google Adwords, you choose keywords, or something similar as we have describe above, but for this example we will use keywords. The more competitive a keyword is, the more it will cost to rank in the Google ads section. This is because of the ‘auction’ system that Google uses to determine ad ranking. PPC Advertising is about placing bids; Advertisers make their bids and then ads are ranked from highest to lowest. However, if you bid $5 for a specific keyword, which is the highest bid, you don’t necessarily pay $5 per click. Instead, the lowest bid becomes the cost of the least visible ad, and then the cost of an ad goes up in increments of $0.05 per bid until the top bidder is reached. Thus, you may pay more or less for the keyword, it all depends on where you sit in the bidding range and how many people are between you and the lowest bid.
Bidding isn’t the only way your position in the ads section is determined. There is a saying in digital marketing, ‘Content is King’. This is true, even for ads. Google will look at the keyword you bid on and review your linked page’s content to determine whether it is relevant and of good quality. In our SEO Guide, we discuss Google’s mission. It is Google’s mission to provide the most relevant, high quality result for searchers. Looking at this logically, it makes sense. If you are searching for something using the keyword ‘nutrition’ and it displays results for photography, you aren’t going to find the photography website very useful.