Google is arguably one of the most important tools for any online business. Ranking well on Google can make a huge difference in your company’s growth. And while SEO and organic rankings are a pivotal part of that, there’s more than one way to use Google to your advantage. In fact, Google AdWords can be an enormous part of your online marketing, if used correctly.

If you’re not familiar with AdWords on Google, keep reading to learn more about this marketing tool, including how average cost per click is calculated, how they determined ad rank for your ad, and other important tricks for using Google AdWords to build your online presence.

What Is AdWords by Google?

AdWords is Google’s paid advertising system, and the most competitive platform for pay-per-click advertising. Businesses can bid on certain keywords, and every time a search is performed for that keyword, Google will display a few of those bidders at the top of the page. But your Google ad rank is not determined by your bid alone. Your relevance will also influence your actual CPC rank, as well as maximum bid, quality of content, and other factors.

Ultimately, the advertised results are a balance between maximum bid and quality and relevance of the website. If a searcher clicks on your ad, Google charges you whatever amount you bid on the search term the person used. Hence the name “pay-per-click advertising.”

How AdWords Bidding Works

Bidding for AdWords on Google is not like a normal auction, where the highest bid always wins. These “auctions” are held billions of times every day, as users search for terms related to your targeted keywords. Your ad’s position is determined by ad rank—your maximum bid multiplied by your quality score. So, even if your bid on a search term is lower than a competitor’s, you can rank higher if your quality score is higher than theirs.

But your maximum bid isn’t the actual amount you’ll pay for every click your ad receives. Your actual cost per click on AdWords is determined by the ad rank of the next ad below you, divided by your own quality score, plus $0.01. With this equation, Google can heavily penalize advertisers who have very low quality scores. But, if you have a high quality score, you can get a high Google ad rank with a lower actual CPC rank.

So, when using Google AdWords, your first goal should be to provide high-quality, relevant content for any search terms on which you want to bid. Then, set a budget for your PPC campaign, and place a maximum bid on as many search terms as you are able.

How Much Does It Cost?

As with any auction, the amount you pay will be determined by the amount you’re willing to bid. Of course, if you want any hope of “winning” a Google AdWords auction and earning a high Google ad rank, then you have to make a competitive bid. And, as mentioned above, if your website quality and relevance is high, you can actually rank well without paying a lot.

Actual CPC rank will vary depending on your industry, the keywords you’re bidding on, and a number of other factors. However, in the United States, the average cost per click is between $1 and $2. Globally, the average cost per click is about $2.32 on the search network and $0.58 on the display network. However, if you’re planning on using Google AdWords, you should research relevant keywords and see the average cost for advertisers before setting your budget and making bids. And remember. Your actual CPC rank will always be lower than your maximum bid. With high-quality content and a decent bid, AdWords by Google can provide you with a very successful pay-per-click advertising campaign.

Using Google AdWords Successfully

Business owners who are new to using Google AdWords will too often view the process as a bidding war. In reality, a successful pay-per-click advertising campaign is one that drives traffic to your site while minimizing your average cost-per-click. As mentioned above, quality content is a key component in driving down those costs, as well as increasing your click-through rates.

But beyond that, managing your AdWords on Google is an ongoing process. You cannot simply place your bids and then leave it be. You must be constantly monitoring the success of these campaigns, viewing your determined ad rank, determining whether a certain keyword is providing enough value, and adjusting bids accordingly. With the right balance between maximum bid and quality, you can keep your average cost-per-click low, while improving your Google ad rank in relevant searches.

Ongoing management of these efforts, as well as researching the proper keywords to bid on, can be a time-intensive and often difficult process to master. While you may be able to learn how to use Google AdWords on your own, working with one of our experts in pay-per-click advertising can be a much wiser investment. The time you would spend on mastering this tool could instead be spent on building your business. And with your pay-per-click efforts in more experienced hands, you’ll get better results much more quickly than you could achieve on your own. Those results can provide you with an incredibly high return on your investment. To learn more about our PPC services, contact us today.