How the Google AdWords Auction Works

Google AdWords is a genius platform – it gives business owners access to 90% of internet users – but it’s tough to understand what you’re really paying for and why.

The Google AdWords auction model isn’t a revolutionary system, but its application to Google search and display networks makes it an extremely efficient and profitable system that helps businesses control how often they show their ads and how much money they are making from them.

At a high level, AdWords is powered by an auction bidding market. Without getting too deep in the weeds just yet, lets quickly break down those two key words: auction and bidding. Think of a live auction – an item is put up for sale with a starting price, and the fast-talking auctioneer begins calling for bids. In Google’s auction, the items up for grabs are the placement of display ads on the display network and search ads for search terms known as “keywords” on Google.com. The people holding up the paddles to bid are advertisers raising their paddle behalf of products and services.

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