What is an ad auction?
An ad auction is a process that occurs for each Google search. It's an algorithm sequence that decides which ads will show up for a specific search and in which order those ads will appear on the page or whether any ads will show at all.
Whenever an ad is eligible to appear for a user-generated search, it goes through the ad auction process. The auction determines if the ad will show and in which position it will show on SERP (search engine results page).
How does an ad auction work?
- Someone searches for a keyword or term. The Google Ads system searches for any ads whose keywords match that search.
- From that pool of ads, the system ignores any ads that aren't eligible. Some reasons an ad may be ineligible include ads targeting a different country or disapproved ads based on policy violations.
- Google sifts through the remaining ads and chooses only those with a high enough Ad Rank to show. Ad rank is a combination of factors that influence how valuable Google sees your ad as being. These include:
- Your bid
- Ad Quality
- Ad Rank thresholds
- The context of the person's searches
- Expected impact of extension and other ad formats
An important thing to remember is that even though you may have competitors bidding higher than you, it's possible to win a higher position through highly relevant keywords and ads at a cheaper rate.
The auction process repeats for every single search on Google, which means that each auction can have varied results depending on the competition at that moment. It's normal to see fluctuations in your ad's position on the SERP.