Paid Search: Auction Mechanics

Auctions may seem an unusual place to start a guide on paid search, but understanding how they work is critical to understanding just about every aspect of the topic. They’re the fundamental mechanism which paid search operates by, and so much best practice is a direct consequence of auction mechanics.

Where do auctions come in?

Let’s say you search “laptop” on Google. In the milliseconds between you making your search, and seeing the results page, an auction is held.

The auction is held between all the advertisers in the world that are bidding on laptop-related keywords, and they’re competing over the right to show you their ad.

All of the ads that are entered into the auction are ranked according to a metric called ad rank, and the four highest-ranked ads are shown above the organic listings on your search results page.Ads that are ranked outside of the top 4 can be shown either below the organic listings, at the bottom of the results page, or on the following pages.

What is ad rank?

Ad rank is the metric that Google uses to determine how advertisers’ ads perform in an auction. Only Google can see individual ad ranks; there’s no way for advertisers to see this data directly.