How the Google Ads Auction Works
The mental model
Every search triggers an auction. Google decides:
- which ads are eligible,
- which ads appear,
- in what order,
- and what each click costs.
Key terms
- Bid: the most you are willing to pay (or what smart bidding aims for)
- Quality signals: expected CTR, ad relevance, landing page experience
- Ad Rank: a combined score that decides ad position
SEO perspective
If SEO is "best answer wins over time", Ads is "best offer + best experience wins right now".
Why your CPC can be high
- You are entering expensive auctions (intent is commercial)
- Your ad and landing page are weak, so you pay more to compete
- Your targeting is too broad, so you buy low-quality clicks
Practical exercise
For a keyword you care about:
- Look at the SERP and note the number of ads.
- Write 2 reasons why the auction is competitive.