How Google Ads Works – A PPC Primer

How did Google make $162 billion in 2020?

The answer is simple - Google Ads. Google Ads (formerly Google AdWords) allows advertisers to position their products & services in the form of image, text, and video ads that reach trillions of users each month to drive qualified traffic. It's a far-reaching one-stop shop to get your messaging to users on,, Google partner sites like Amazon and The New York Times, and Google's massive display network of websites. Using Google Ads, you can reach 90% of all US users on the internet.

Advertisers pay Google each time a visitor interacts with an advertisement, usually a click. A click may cost you anywhere from $0.50 to over $60 for highly competitive search terms such as insurance, lawyers, and contractors to name a few.

Google Search Network

If you’re wondering what Google Ads looks like, all you need to do is perform a search on Google. You can then take note of the advertisements strategically placed within the search engine results page (SERP). Typically, these advertisements consist of an eye-catching headline followed by additional lines of text and a number of extensions and snippets such as price, ratings, business address, and other snippet options.

Google Text Ads in the Google Search Engine Result Pagegoogle-ads-primer-serp-ads

Google Display Network

You will also find Google Ads on any websites participating in the Google Display Network such as popular news sites like and The Huffington Post. Google's display network reaches trillions of users each month not counting and YouTube.

Google Image Ads in the Google Search Engine Result Page

In addition to being the single largest ad network on the internet, Google Ads is a self-service platform with no up-front cost nor long-term commitment, cementing Google Ads as the initial go-to for most advertising campaigns.

Google Ads Targeting Options

While having the ability to get in front of a massive audience is great, it's not effective unless we can narrow reach to our specific target audiences. Thankfully Google offers the levers needed to do just that. We first start with the type of targeting, which breaks down into Audience versus Content:

Audience Targeting

Google Ads offers the following specific targeting types to place your ads in front of the most qualified audience possible:

  • Demographics: Target certain geographic locations, ages, genders, and device types such as desktop computers versus smartphones.
  • In-market: Target users searching for products and services similar to yours. These users may be looking to make a purchase, or have previously made a purchase and could still be interested enough to interact with your ads.
  • Custom intent: A hybrid of content & audience targeting where you identify keywords and websites your target audience is interested in.
  • Similar audiences: If you have an existing audience you can expand it by reaching additional similar users with related interests
  • Remarketing: Users who have already interacted with your ads or website. Being able to show ads to visitors after they leave your site for up to 90 days is a powerful tool.

Content Targeting

Content targeting is how you can place ads at the time your audience is searching for a product, solution or simply learning more about a specific topic related to your offerings.

  • Topics: Topics are categories of content allowing you to reach a broad range of pages on the Display Network. Topics are identified by Google Ads from an analysis of web content and consider factors such as text, language, link structure, and page structure. It then determines the central themes of each webpage and targets ads based on your topic selections.
  • Placements: Target specific websites your target audience visits. Pretty straight forward - place ads directly on sites you choose.
  • Keywords: This is the most common targeting method across the Google Ad search network. Unlike other platforms like Facebook and LinkedIn, Google is built around the concept of search, so being able to identify a list of keywords that show ads based on actual search phrases entered by users is a major feature here and generally not found on most large ad platforms like Facebook and LinkedIn. You can also include negative keywords, to stop your ads from showing when users, for example, include "free" or "job" in their searches, which are common negative keywords. Google Ads offers different match types such as broad match, phrase match and exact match to ensure control over when your ads show versus when you don't want them to show.
  • Google Shopping: When doing searches for products you've probably seen Google Shopping Ads. These ads are powered by keyword searches and are based on the products you offer on your website.

Those are just the highlights - if you're looking to dive deeper Cypress North offers a great guide that dives into great detail on audience targeting options.

Google Ads Bidding Options

Okay so I can reach a massive audience and I have an entire toolbox to target the right users at the right times - great! How many millions of dollars will I have to pay to reach these people?

Here are Google Ads industry benchmarks around average cost per click and covers both the search and display networks:

Google Adwords Industry Benchmarks Average Cost Per Click

Warning - if you are a local service provider in competitive verticals like legal, accounting, IT and home services your search network keyword cost per click can drastically shoot up in cost to over $20.00 per click for specific terms like personal injury and mold remediation.

Google Ads also offers bidding options such as maximizing clicks and maximizing conversions - you are given tools to utilize your budget with a specific objective in mind Google will automatically work to achieve. You can also set your maximum bids and have specific controls over how much you spend each day via your daily budget settings to offer predictable ad costs. Ads also have a quality score associated with them - the more closely themed your keywords + ads + landing pages are, the higher your quality score becomes which helps to lower your cost per click. Each time an user triggers an ad to show, an auction takes place and the advertiser with the highest bid + ad score generally wins that auction and grabs the top positions. More on quality score.

Because you can set up conversions in Google Analytics, then connect that tracking to Google Ads, it's pretty easy to track conversions. This is important because conversion tracking offers clarity on what your actual revenue and thus ROI are, and can be used by Google Ads to automate increasing your click quality. You should never run a PPC account without having conversion tracking configured. You must always know if your ad dollars are converting into value.

Google Ads Ad Types & Options

Ads are pretty straightforward, they come in contextual (text), image, video and product ads formats. Here is a list of all ad formats. The most common ad types are typically the easiest to create which are text and image ads. There are generally three ad types we focus on which are text ads, image ads and responsive ads

Text Ads

Google Ad Example Contextual Advertisement

Your standard text ads. These consist of a headline and longer descriptions. Karoyya offers a great contextual ad tool that clarifies all the fields that can be utilized for an ad plus options and limitations.

Image Ads

Google Ads Example Image Advertisement Display

Image ads are images with specific width and height requirements. While Google Ads has many formats, most advertisers only need to worry about a few. Here is an article on image ad size recommendations.

Responsive Ads

Google Ads Responsive Advertisement Example

Responsive ads are a hybrid between text and image ads. They contain both text and images and are much easier to create and edit due to all the messaging being text. They can also perform better and Karoyya offers a tool for them too.

Putting it All Together

We have the largest ad platform, a list of our target customers, ads to place in front of those users along with fine tuning options to only attract the most qualified users via relevant keywords and targeting criteria. We have conversion tracking set up to identify when our clicks convert into our goals - typically sales, leads or signups. The goal now is to measure your ad spend versus results and tweak to get the most return on investment (ROI) as possible! Pay attention to cost per lead and cost per conversion to ensure your campaign is staying on track.

In Closing

Google ads are a powerful advertising tool for businesses of all sizes. Small campaigns can be set up quickly, while larger campaigns should be planned out beforehand to identify specific objectives, goals and timelines. Here at WT Digital, we spend a lot of time planning and managing digital advertising campaigns, and we'll be happy to discuss your specific needs + goals.