freecourses.digital
Lesson progress: 0 of 3 activities done
All lessons in Google Ads for Beginners Lesson 0.3 of 24

Module 0: Introduction to PPC

  1. 0.1What is PPC?
  2. 0.2PPC vs SEO vs SEM
  3. 0.3How the Google Ads auction works
  4. 0.4PPC platforms compared

Module 1: Planning Your First Campaign

  1. 1.1Setting PPC goals
  2. 1.2Setting a Google Ads budget
  3. 1.3PPC keyword research
  4. 1.4Google Ads keyword match types
  5. 1.5Negative keywords

Module 2: Building the Campaign

  1. 2.1How to create a Google Ads account
  2. 2.2Campaign and ad group structure
  3. 2.3Location, language, and schedule
  4. 2.4Google Ads bidding strategies

Module 3: Writing Ads That Get Clicks

  1. 3.1How to write responsive search ads
  2. 3.2PPC ad copy formulas
  3. 3.3Google Ads assets
  4. 3.4PPC landing page best practices

Module 4: Tracking Results

  1. 4.1Google Ads conversion tracking
  2. 4.2What is Quality Score?
  3. 4.3PPC metrics that matter
  4. 4.4Google Ads search terms report

Module 5: Optimizing and Scaling

  1. 5.1Your first 30 days
  2. 5.2Common Google Ads mistakes
  3. 5.3Your PPC action plan

How the Google Ads auction works

Covered here

  • What happens in the ad auction, step by step
  • What Ad Rank is and what affects it
  • How your max bid relates to what you actually pay
  • Why ad quality can beat a bigger budget

Short answer

Google Ads runs an auction for every search. It gives each eligible ad an Ad Rank based on your bid, your ad quality, and the search context. Higher Ad Rank means a higher ad position. You often pay less than your max bid, and good ads can win with smaller bids.

What happens when someone searches

Say someone in Davao searches “durian delivery.” In less than a second, Google does this:

  1. Finds all ads with keywords that match the search.
  2. Removes ads that are not eligible, like ads targeting other cities.
  3. Gives each remaining ad an Ad Rank score.
  4. Shows the ads in order, highest Ad Rank on top.
  5. Skips ads that fall below a minimum quality level.

This happens on every single search. That is why your ad may show on one search and not the next.

What is Ad Rank?

Ad Rank is the score Google uses to decide your ad position. Google does not publish the exact formula, but it shares the main factors:

Ad Rank combines bid, ad quality, and search context to set ad positionMax bid₱25Ad qualityCTR, relevance, pageSearch contextplace, device, timeAd Rankper searchPosition 1Position 2Position 3
A lower bid can still win when ad quality is high.
  • Your bid: the max bid, or the most you will pay for one click.
  • Ad quality: how relevant your ad and landing page are, and how likely people are to click.
  • Ad Rank thresholds: the minimum quality needed to show at all.
  • Search context: the user’s location, device, time, and the words they typed.
  • Expected impact of assets: extra details like phone numbers and links, covered in Lesson 3.3.

Ad quality is summed up by Quality Score, a 1 to 10 rating. You will learn it in Lesson 4.2.

Why the highest bid does not always win

AdvertiserMax bidAd qualityResult
Seller A₱40LowPosition 3
Seller B₱25HighPosition 1
Seller C₱30MediumPosition 2

Seller A bids the most but lands last. Seller B wins the top spot with a clear ad and a fast, relevant page. Google rewards this because useful ads keep searchers happy. For you, it means better ads can lower your costs.

What you actually pay

Your max bid is a ceiling, not the price. In general, you pay only what you need to keep your position above the next advertiser. If you bid ₱25 and that is more than needed, you might pay ₱18 for that click.

You will choose how bids are set, manually or automatically, in Lesson 2.4.

Try it: auction simulator

This is a simplified model, not Google’s real formula. Change one setting at a time and watch what moves.

You sell durian in Davao. Set your bid and ad quality, then run the auction.

    Quick quiz

    1. When does Google run the ad auction?
    2. Which can help a lower bid win?
    3. Your max bid is ₱25. What do you usually pay?

    Common mistakes

    • Raising bids as the only fix. Improving your ad and page often works better and costs less.
    • Expecting the same position every time. Each search has a new auction.
    • Thinking top position is always best. Position 2 or 3 can bring cheaper clicks that still convert.
    • Ignoring the landing page. It is part of ad quality.

    Your action

    Search for one product in your city at three different times of day. Note which ads appear and in what order, and write down one reason the order might change.

    Key terms

    Ad auction
    The process Google runs on each search to choose which ads show.
    Ad Rank
    The score that decides your ad position.
    Max bid
    The most you are willing to pay for one click.
    Ad position
    Where your ad appears among other ads.
    Actual CPC
    The amount you are really charged for a click.

    Questions beginners ask

    Does the highest bidder always get the top spot?

    No. Ad quality and search context can let a lower bid win.

    Do I always pay my max bid?

    No. You often pay less, just enough to hold your position.

    Can I see my Ad Rank?

    No. Google does not show it, but Quality Score and position data give clues.

    Related lessons

    Want someone to run your Google Ads while you learn? The team at Remar Digital can help.