What is Google AdWords?

Search engine advertising isn’t just reserved for global players. Thanks to cost-efficient pricing models and control functions, the online marketing sector gives small and medium-sized companies and freelancers the chance to reach a large audience with a manageable budget. The market leader when it comes to search engine advertising (SEA) is Google. Their advertising platform, AdWords, offers website owners the opportunity to manage campaigns for the search engine and to supplement these with multimedia ads on the Google Display Network.

How does Google AdWords work?

Through AdWords, Google offers a central tool for SEA. The internet platform has developed into the biggest online advertising network in the world in just a few years and offers customers different ad formats on both search engine as well as third-party pages.

Advertising formats on the search engine

Google AdWords enables advertisers to place text displays on Google’s search engine results pages (SERPs) as well as on other platforms, like Google Play, Google Shopping, and more. These appear above and below the results of the original web search on the SERP. Google AdWords additionally cooperates with various other search services.

  • Text displays: Google text displays for the search engine consist of a heading with a maximum of 25 characters, two lines of text, each 35 characters, and a display URL, which doesn’t have to match the actual URL link.

Display format in the Google Display Network

Google AdWords’ influence stretches beyond the search engine. The Google Display Network makes it possible for AdWords customers to place ads on other Google sites, like Google Finance, Gmail, Blogger, and YouTube; placing ads on third-party sites is a further option. These ads are not limited to text displays – they are also available in multimedia formats.

  • Image ads: banner advertisements are set to standard image formats on the Google Display Network and are tailored to various webpage elements. An overview of the available formats can be found here.
  • Rich media ads: these are image displays containing interactive elements like call to action (CTA) buttons or product carousels in HTML, Flash, or video format.
  • Video ads: AdWords offers two varieties of video display on the Google Display Network and YouTube: TrueView In-Stream and TrueView In-Display. TrueView In-Stream ads are played out before, during, or after a video on either YouTube or a third-party site. TrueView In-Display ads appear each time an internet user searches for video content on either Google or YouTube.

Google AdWords in action

The Google advertising network’s principle aim is to display the most relevant advertising possible. This is why Google AdWords campaigns are keyword-based. If an internet user enters specific search terms into Google, the search engine automatically generates advertisement that use these keywords and displays them in the SERPs. Keywords also play an important role in Google’s display network given that these make it possible to display ads on publisher sites according to themes. Should multiple AdWords clients be suited to the same online ad space, then they go through an auction process to decide which advertiser wins.


There’s more to AdWords than simply displaying ads in a way that doesn’t disturb or annoy the user. It’s important to also offer them a concrete benefit as well. Every ad that appears will closely match the keywords entered by the user. These keywords could be a single term or a collection of words, known as keyword phrases. Typically, advertisers will include keywords that potential customers use most commonly when searching. This means that keyword research is central to any successful Google AdWords campaign. In order to help advertisers find out which keywords are used most often, Google has integrated a free research tool into AdWords, known as the Keyword Planner. This enables advertisers to find new keywords for their ads, assess their usefulness in campaigns using statistics and traffic forecasts, and determine the appropriate advertising budget. More information on the AdWords Keyword Planner is available here.

Google‘s ad auction

In order to decide which ad will be displayed for the relevant keyword in question, Google carries out an ad auction. This takes place automatically whenever a user searches on Google or on one of the Google Display Network partner sites. This auction decides the ad ranking order. This ranking order is responsible for whether an ad appears in the search results pages and in what position. The main factors in deciding the ad ranking order are the monetary bid of an advertiser and their Quality Score. Search engine advertising is also influenced by optional ad extensions.

  • Ad bid: every advertiser has to make a bid declaring how much they are prepared to pay for the ad to appear on the SERP or Display Network. The actual cost for an AdWords ad display is often lower than this bid.
  • Quality Score: the Quality Score reflects the relevance of an advert and its link to the search engine user or partner site user. This is calculated as a figure between 1 and 10, and is displayed on AdWords. Because Google strives to make ads as relevant to user searches as possible, a higher Quality Score can reduce the cost of an ad significantly.
  • Ad extensions: it’s possible to add optional elements like telephone numbers or links to specific pages of a website to text displays on Google. These are known as ad extensions. If the AdWords system determines that a particular ad extension increases value for the user, then this will affect the ad rank.


There are three bidding strategies to choose from when determining the cost of a Google AdWords campaign. The advertiser can decide whether to focus a campaign on clicks, impressions or conversions.

  • CPC (cost per click): cost per click means that the advertiser only pays when users click on their ad. The advertiser sets a maximum CPC in AdWords, before an amount is determined for each click, based on the quality of the display. This means that the higher the Quality Score for the ad, the less it will cost for a click. CPC is the most common form of billing for search engine advertising.
  • CPM (cost per mille): if an advertiser chooses to pay using the cost per mille strategy, they will be charged for the number of impressions (views) of an ad across the Google Display Network. As in CPC, the advertiser sets a maximum CPM, and Google calculates a cost within that for every 1000 impressions. This bidding strategy is only available for campaigns across the Google Display Network.
  • CPA (cost per acquisition): this pricing strategy focuses on user actions after clicking on the ad. In setting a CPA price, the advertiser confirms the price they are prepared to pay for sales resulting from clicks. The cost per acquisition model is recommended for experienced AdWords customers who wish to increase the conversion rate on their website.

In order to give advertisers comprehensive control over their spending, Google AdWords campaigns are centered on individual daily budgets. Advertisements are only displayed until the corresponding budget has been used up.

Increase your website’s success with Google AdWords

Before starting a campaign with AdWords, it’s worth thinking about the objectives of this marketing tool. AdWords customers typically want to achieve the following goals when they place their ads on Google or the Google Display Network:

  • Increase market awareness
  • Increase website traffic
  • Generate leads
  • Improve sales
  • Generate visits to offline stores

AdWords is a powerful tool with an enormous global reach through the Google search engine and Display Network. However, advertising budgets are normally quite limited, while profitable keywords and online advertising spaces are fiercely competitive. The challenge of running a successful Google AdWords campaign is to optimize displays for their selected marketing aim and display them where they can be most effective. How advertisers manage this is discussed in depth in our article on AdWords optimization.

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