Lead Generation

Google Ads: What They Are and How They Work

8 Minute Read

You’ve seen Google Ads everywhere, whether you realize it or not. Perhaps when you’ve performed a Google Search, while browsing your favorite news sites, or even YouTube Ads before you watch your video.

Everyday, people are using Google to search for answers, find products and services, which translates to over 3.5 billion searches per day.

Online advertising through Google has become an essential tool for businesses looking to expand their online presence and reach their target audience, and most importantly, driving sales and revenue.

Google Ads, previously known as Google AdWords, is one of the most effective and widely used platforms for online advertising. Also, “Google Ads” is a much stronger and more relevant name than Google AdWords, as it encompasses a rich tapestry of ad types beyond just words.

Whether you’re a small business owner or a real estate professional, understanding how Google Ads work is crucial for a successful lead generation or brand awareness campaign.

In this comprehensive guide, we’ll delve into all aspects of Google Ads, answering key questions and providing valuable insights into what they are, how they work in the Google Ads platform, the different types available, and the costs involved.

So, let’s get started with the basics of Google Ads.


Google Ads - What Are Google Ads - Digital Marketing for Small Business Toronto - JP Marketing Associates

What Are Google Ads?


Google Ads, simply put, is an online advertising platform developed by Google, where your ideal clientele performs a Google Search, and ads appear among the top search results.

This gives businesses, like yours, the opportunity to create Google Ads and display advertisements on Google’s search engine and its advertising network.

It’s a powerful tool when you know how your ideal clientele thinks and their intent when they search. You can then leverage relevant keywords that your ideal clientele would use to find products and services like yours, and place ads right onto Google.

The entire Google Search Network, which is a group of search-related websites and apps where your ad can appear across the web, is at your disposal. Here’s more detail about the Google Search Network.

These ads can appear in various formats, such as text, images, and videos, and they are designed to target specific keywords, locations, and demographics.

RELATED: Online Lead Generation (2024 Strategy Guide)

Key Takeaways

  • Google Ads is an online advertising platform developed by Google.
  • Advertisers create and display ads on Google’s search engine and advertising network.
  • Google Ads can take different formats, including text, images, and videos.
  • Google Ads targeting options in the Google Ads account allow advertisers to reach specific audiences.


Google Ads - How do Google Ads Work - Digital Marketing for Small Business Toronto - JP Marketing Associates

How Do Google Ads Work?


To understand how Google Ads work, it’s essential to grasp the auction-based system that underlies the platform.

Here’s a step-by-step explanation of the process:

  1. Keyword Selection: Businesses looking to reach their target audience choose specific keywords related to their products or services that trigger their ads when users search on Google for those keywords, or the terms they would likely use, called search queries. This is the first part to selecting your ad targeting.
  2. Ad Creation: After selecting the target keywords, they then create ads with compelling headlines and descriptions. These ads can appear on Google’s search results pages, YouTube, or across the Google Display Network. It’s important to maintain a good quality score for your Google Ads.
  3. Bid Strategy: Businesses set their bid amount, their bidding strategy, and the maximum bid, which is the maximum amount they are willing to pay when someone clicks on their ad. This is known as Cost Per Click (CPC). Advertisers bid, but it is not necessarily what the price that the advertisers pay; it is just your maximum bid.
  4. Auction Time: When a user enters a search query that matches the selected keywords, an auction is triggered. Google’s algorithms consider several factors, including the bid amount, ad quality, ad targeting, competition, and expected click-through rate, to determine the winner.
  5. Ad Display: If your ad wins the auction, it is displayed to the user. If multiple advertisers are targeting the same keyword, the ad with the highest Ad Rank (bid x quality score) typically gets the top spot.
  6. User Clicks: When a user clicks on your ad, you are charged the amount of your bid, and they are directed to your website or landing page. They more relevant your ads and keywords are to your target clientele, the more qualified traffic will be that could convert into potential customers and clients.
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Google PPC Launch Checklist For Small Business

This powerful tool is easy to follow for non-technical business owners.

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Key Takeaways

  • Google Ads operate on an auction-based system.
  • Advertisers select keywords, create ads, and set bid amounts.
  • Auctions are triggered when users search for keywords, and the winner’s ad is displayed.
  • Advertisers are charged when users click on their ads.


Google Ads - Different Types of Google Ads - Digital Marketing Toronto - JP Marketing Associates

Google Ads – The Different Types


Google Ads offers a variety of ad formats to suit different marketing goals and target audiences. All of these types are at your disposal for your next Google Ads campaign.

Here are some of the most common types that you can access in your Google Ads account:

Google Ads - Google Search Ads PPC Example - Digital Marketing for Small Business Toronto - JP Marketing Associates

Google Search Ads (Google PPC)

These text-based ads appear on Google’s search results pages when users search for specific keywords; it’s the most common type of ad to generate leads and sales, and they show above the organic results.

Google Search Ads are a great way to capture users actively looking for your relevant products or services both in their local area and online.

These Google Ads are also known as Google PPC, which stands for Pay Per Click. This is where you pay on a Cost Per Click model, where you only pay when someone clicks your Google Ads.

You can also use responsive search ads where you give Google Ads algorithm the option to display one of five headlines and descriptions that best match the search criteria of the user, so you can maximize your efforts when crafting compelling ad copy.

You have the option to use Ad Extensions to your Google Ads, where the ad can display your local address, phone number, and special offers.

Use this type to generate conversions, like more website sales, capture leads, book appointments. Conversion tracking becomes very easy and straight forward.

For most businesses, these Google Ads works best to increase revenue.

Google Ads - Google Display Ads Example - Digital Marketing for Small Business Toronto - JP Marketing Associates

Google Display Ads or Image Ads

Display ads are visually appealing image or video ads that appear on websites within Google’s Display Network.

They can help build and maintain brand awareness and reach a broader audience. Many eCommerce brands use this style to advertise deals, and win back abandoned carts.

These ads are generally strong for driving traffic to your landing page.

Google Ads - YouTube Ads Example - Digital Marketing for Small Business Toronto - JP Marketing Associates

YouTube Ads and Video Ads

Video ads are a type of Google Ad displayed on YouTube and the Google Display Network. They allow you to engage users with video content.

They can be in the form of those non-skippable YouTube ads before your video plays, called a pre-roll. For a longer form video, they could happen in the middle of the video, kind of like a commercial break; these are called a mid-roll ad.

And finally, they sometimes play at the end of the video after you’re finished watching and before the next video starts.

Since Google owns YouTube, the conversion tracking is very seamless with your Google account.

Google Ads - Google Shopping Ads Example - Digital Marketing for Small Business Toronto - JP Marketing Associates

Shopping Ads

Designed for e-commerce businesses, shopping ads display product images, prices, and business information.

They appear when users search for products on Google. Shopping ads are smart campaigns that help drive more sales, as they are displayed at the moment users search for them.

Google Ads - Google App Ads Example - Digital Marketing for Small Business Toronto - JP Marketing Associates

App Ads

An app ad campaign promote mobile apps across various Google platforms, including the Google Play Store and YouTube, in an effort to generate more sign ups and app installs.

Key Takeaways

  • Google Ads offer various ad types, including Search Ads, Display Ads, Video Ads, Shopping Ads, and App Ads.
  • Each Google Ads type serves different marketing goals and target audiences.

Free Download

Google PPC Launch Checklist For Small Business

This powerful tool is easy to follow for non-technical business owners.

Download this resource

How Much Do Google Ads Cost?

The cost per click of Google Ads can vary widely depending on various factors, including your industry, keywords, location, and the competitiveness of your chosen keywords.

It’s important to set a budget that aligns with your business goals and monitor your campaigns to ensure a positive return on investment.

Here are a few key points to consider regarding Google Ads costs:

  • Keyword Bidding: Popular keywords often have higher bidding costs, so it’s essential to research and choose your keywords strategically. Luckily, you’re able to set your daily budget, so set it to a number that gives Google the opportunity to show your ads enough times in a day and enough to compete.
  • Quality Score: Ad quality score can impact your costs. High-quality ads may achieve a lower CPC and better ad placements. I recommend checking the recommendations that Google provides in your account to keep a consistently high quality score.
  • Ad Position: Ads appearing at the top of search results pages typically have a higher CPC, but will receive the most traffic.
  • Ad Groups: It’s recommended to have a separate ad group for different keywords, and different goals. This greatly reduces costs, rather than putting all your ads into one single group targeting every segment of your market.

It’s worth noting that Google Ads offers flexibility in setting daily budgets and adjusting bids to control costs effectively.

RELATED: Online Lead Generation (2024 Strategy Guide)

Frequently Asked Questions About Google Ads(FAQ)

How Do I Sign Up for a Google Ads Account?

Signing up for Google Ads is a straightforward process. Visit the Google Ads website and follow the steps to create your own Google Ads account, set your campaign preferences, and start running your ads.

Is Google Ads Worth It?

The worth of Google Ads depends on your business goals and the effectiveness of your campaigns. Many businesses find it highly valuable as it allows them to reach a specific and engaged audience.

However, success in Google Ads requires strategic planning and ongoing optimization.

Do Google Ads Work?

Google Ads can be highly effective when executed correctly. They work by connecting your ads with users actively searching for products or services like yours.

By targeting the right keywords, creating smart campaigns, maintaining a high quality score, and optimizing your ads, you can achieve positive results.

Which Google Ad Type is Best for a Small Local Business?

For small local businesses, Search Ads and Local Services Ads are often the most effective. Search Ads help you reach local users actively searching for your products or services, while Local Services Ads are tailored for service-based businesses seeking local customers.

The Bottom Line – Start Implementing Google Ads

Google Ads is a powerful platform that offers businesses a wide range of options for reaching their target audience.

By understanding how it works and making strategic decisions, businesses of all sizes can benefit from the opportunities it provides.

Whether you’re looking to drive website traffic, increase brand visibility, or generate leads, Google Ads can be a valuable addition to your marketing toolkit.

Which Google Ads campaign is right for you? If you need help deciding, or setting up your ads, setting up your Google Account we’re always here to help with your first campaign.

Alternatively, if you’ve been running your Google Ads and you haven’t been getting the performance max results that you’re looking for, reach out to us.

Book a meeting with us here, and we’ll help streamline the process and get your ads working without the hassle.

About The Author

Johnny Pomykacz is the CEO & Founder of JP Marketing Associates. He specializes in carefully crafting sophisticated digital experiences for individuals and small businesses in the real estate and healthcare space.

Book a meeting with Johnny to start generating cost-effective leads with Google Ads.

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