Everything You Need to Know About Google Ad Auction

Published on 28.05.2026 by Chizoba T

Reports indicate that 80% of businesses use Google Ads for their PPC campaigns. This is understandable considering that Google commands 83% of the search engine market. That means when creating a SEM strategy, you should consider Google Ads for your PPC campaign.

When running Google Ads, you need to have a good understanding of how the Google Ad Auction works. This is the system that determines which ads are shown for a search query and where they appear. In this article, we will guide you on how the Google Ad Auction works.

What is Google Ads Auction?

The Google Ad Auction is a system that determines which ads appear for a particular search query and in what order in the SERP. Whenever Google determines that a search query matches an ad, it sends the ad through the auction system to determine where it appears and the level of visibility.

The system begins by identifying ads with keywords matching the search query and excludes those that aren't legible, such as ads that violate policies or target a different region. For each search query, all ads that match it are entered into the auction. To determine the success of the ad, the system considers the ad's cost and quality score, a measure of relevance, and the likelihood of a higher click-through rate.

The system also considers factors such as the bid, target audience, ad quality, and search content to determine which ad to display. Based on these factors, if your ad has a high quality score, it will receive better ad placement even if its bid is lower, meaning that ad quality is as important as the bid amount.

The goal of the system is to ensure that users see only relevant ads and that advertisers achieve a return on ad spend (ROAS). You can use various bid systems and ad formats to optimize your campaign for maximum efficiency and return on investment. Since each search triggers an auction, the results are determined by factors such as competition. That means the ad position can keep on fluctuating, impacting their visibility.

Factors Influencing Google Ads Auction

The Google Ad Auction is affected by several factors. These are:

Bid and Budget

If all factors are constant, the ad with the highest bid will be shown to the user or will be placed in a better position. That means having a higher Google ad budget can result in a higher placement. That also means that if you find your competitors are ranking better than you, you may want to increase your budget.

Ad Quality Score

The quality score is a metric Google uses to indicate an ad's relevance to users. The quality score considers different components, such as:

  • Ad relevance. If the ad copy has the keywords the user is searching for.
  • Expected Click-through rate of the ad (current and historical). The possibility that users will click your ad when they come across it.
  • Landing page quality. Where users are sent from the ad, do they find the landing page user-friendly and relevant, and does it match the ad?
  • Ad performance by device type.

The quality of your ad and its landing page will also be considered by Google when determining if it's a quality fit. If your ad has a higher quality score, it will be given priority and may even cause your ad to be placed at a lower bid. A high-quality score is important for cost-effective ad performance, as it ensures higher ad placement at a lower cost. On the other hand, if the ad has a lower score, it will be charged more. Therefore, a high-quality score can improve visibility and ensure you have more effective, cost-effective ads.

Google Ads Auction Bidding Strategies

Before you start bidding on Google Ads, you need to understand the difference between a bid and a budget. The bid is the amount you are willing to pay users to click your ad, which affects the ad's location and frequency. On the other hand, the budget is the total amount you are willing to spend in a day. To optimize bidding, refine your keyword strategies to align with your campaign goals. You can choose from the following bidding strategies on Google Ads:

  • Manual CPC (Cost per click). This enables you to control the bids directly.
  • Enhanced CPC. Ensures the bid is adjusted to increase conversion rates.
  • Target CPA (Cost Per Action). This focuses on a particular cost per acquisition.
  • Target ROAS (Return on Ad Spend). This focuses on optimizing for a higher return on your ad spend.
  • Maximizing Clicks. This aims to achieve a higher number of clicks within a given budget.

The different strategies usually serve various objectives. While the manual CPC offers users more control, if you need the highest possible conversion, consider the improved CPC. The target ROAS and CPA are great for campaigns that focus more on cost and have a limited budget. They are effective at maximizing clicks without increasing site traffic.

If you are unsure of the bidding strategy, start with a generic campaign that offers maximum conversion or maximum conversion value. You can then add a specific ROAS or CPA later. 

Tips on Improving Your Ad Rank

To minimize costs and improve your Google Ad Rank, focus on improving your quality score. To do that, focus on improving the ad's relevance, enhancing the landing page user experience, and boosting your CTR. You can do that in different ways, such as:

  • Improving the ad relevance. The ad copy should match the search query. Therefore, make sure you are using the target keywords.
  • Better user experience. Create a seamless experience for users by sending them to a page that addresses the search intent, loads fast, and is user-friendly.

Final Thoughts

If you want to achieve the highest ROI, increased conversion, and lower CPS, you need to optimize your ads. Continuously refining your ad will enable you to target the right audience, improve your quality score, and use your budget more efficiently. It can be a good strategy for transforming your poorly performing campaigns into highly targeted, profitable, and scalable results. Therefore, use this guide to optimize your ads for the Google Ads Auction. You can also read our guide on how to monetize a Facebook group in 2026.