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How Adwords Auction works?

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Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

Hello ,

 

I am very keen to know how the auction works (How CPC's are determined), what are all the elements is considered?

Is it still

AdRank = Max Bid*Quality Score

&

( Competitor Ad Rank/Your Quality Score) +0.01 = Actual CPC

 

Could Somebody advise me on this please.

 

Regards,

RP

 

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Accepted by MosheTLV (Top Contributor)
2w

How Adwords Auction works?

Top Contributor
# 2
Top Contributor

How Adwords Auction works?

Visitor ✭ ✭ ✭
# 3
Visitor ✭ ✭ ✭

Thanks For the Reply Deepak.

 

I have already watched this video, where I got most of my doubts cleared. But the one that I was anxious to know about is how that number (CPC) is generated. i.e, In the video , Hal said Advertiser 1 would pay $1.73 to beat Advertiser 2 Ad rank. My question is how he came up with that number? is it by using this formula 

( Competitor Ad Rank/Your Quality Score) +0.01 = Actual CPC

 

Thanks,

RP

How Adwords Auction works?

Top Contributor
# 4
Top Contributor

Hi RP,

 

"Advertiser in position 1 has to pay just enough to beat the 'ad rank' of the advertiser in position 2."

 

So the actual CPC calculation for advertiser 1 is based on 'ad rank' of advertiser in position 2.

 

Ad rank calculation is very complex when we consider this definition - "Ad Rank is calculated using your bid amount, your auction-time ad quality (including expected click through rate, ad relevance, and landing page experience), the Ad Rank thresholds, the context of the person’s search (for example, the person’s location, device, time of search, the nature of the search terms, the other ads and search results that show on the page, and other user signals and attributes), and the expected impact of extensions and other ad formats."

 

https://support.google.com/adwords/answer/1752122?hl=en&ref_topic=24937

 

Deepak

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How Adwords Auction works?

Top Contributor
# 5
Top Contributor

Think about QS and ad rank as currency exchange... it makes your dollars worth more or less than your competitors. When the auction is run in "dollars" then you have to pay 1 cent more than them to win the auction - but that amount is then translated back into your currency - let's say "euros". What you actually have to pay and what your competitor has to pay may be quite different as you have different exchange rates.

How Adwords Auction works?

Visitor ✭ ✭ ✭
# 6
Visitor ✭ ✭ ✭

Thanks For the Reply. Really Appreciate your time! Smiley Happy

 

But My doubt was not cleared, I think Google should be more transparent about how  AdRank and CPC's are being calculated, Still it looks like a mystery to me.