How does Google Ads work?5 min read

Every month, hundreds of people Google some variation of the question “How does Google Ads work?”

Maybe that’s even how you found this blog post. In which case, welcome to Digital Gearbox. It’s nice to meet you.

Google Ads – previously known as AdWords – has earned a reputation for delivering fantastic returns. It’s not at all uncommon to get £3 of sales back for every £1 you spend.

And run well, you can achieve some truly incredible results. Take The Pi Hut, for example, where we boosted their Google Ads return from £4 of revenue for every £1 spent to over £10 for every £1 spent.

So little wonder there’s hundreds of businesses asking the question every month: “We want to get started with Google Ads – but how does it work?”

Well, we’re on hand to answer that question.

This is how Google Ads work

When most people think Google Ads, what they have in mind is exclusively Google’s paid search advertising. So, let’s take a look at that…

Search ads appear at the top of the results page on Google, above the organic (non-paid) results*.

Example of Google Ads at the top of Google's search engine results page.

This presents a unique opportunity for you to get your website in front of people searching for the exact product or service you offer, right when they want it.

Just think of your poor competitors, who have dedicated years of SEO optimisation to organically get their website to the top of Google’s results page – only for you to swoop in and capture all that traffic with your paid ads.

Even better, you only pay when someone actually clicks on your ads. If no one clicks, you won’t pay a penny.


You control which searches your ads show for by picking the keywords you want to target.

You can be as broad or as precise with your keywords as you like. And remember, keywords aren’t just a single word, they can be a phrase, too.

Why not take a moment to think about which keywords you’d want your website to appear for?


For every keyword you target, you choose a maximum bid you’re willing to pay per click. Every time someone clicks on one of your ads, you pay up to the maximum bid for the keyword that triggered it.

When someone searches for a keyword you’re targeting, you enter into an auction against everyone else also targeting that keyword.

This process happens automatically, and it lasts only a fraction of a second.

You’ll pay just 1p more than the next highest bid, and you’ll never pay more than your chosen maximum bid.

Deciding how much to bid on a keyword is a balancing act: if you go too low, your ads won’t show. If you bid too high it’ll be expensive, and the advertising will no longer be profitable.

It’s important you don’t just set and forget your bids. Changes in competition, audience behaviour, and Google’s algorithms will mean the bid you set in January might no longer be suitable in February.

Review all your bids on a regular basis to ensure you’re continuing to bring in the results you want at a price that’s profitable.

(*A quick note here: I simplified things when I said earlier that ads appear above organic results. They can also appear below them. Where exactly the ads appear will depend on your bid.)

Account structure

A Google Ads account is broken down into one or more different campaigns.

Within a campaign, you have one or more ad groups.

Within an ad group, you have one or more keywords, as well as the ads you want to show if those keywords are searched for. (And you’ll usually have 3 different versions of the ad within the ad group, which will allow you to experiment with copy.)

The Google Ads account structure is key to understanding how Google Ads works.

For example, let’s imagine there’s a company that sells shoes. We’ll call them “Shoes For Yous”.

Shoes For Yous might have two campaigns: one for men’s shoes and the other for women’s.

Within the “women’s shoes” campaign, there might be one ad group for trainers (with keywords related to women’s trainers) and one for formal shoes (with, you guessed it, keywords related to women’s formal shoes).

This allows Shoes For Yous to get more specific with the ads they show. Someone who searches “buy women’s trainers” will see a different ad than if they searched for “buy high heels”.

By tailoring ads and keywords to the ad group in this way, shoppers will be more likely to click on the ad and purchase from Shoes For Yous.

Will Google Ads work for your business?

Here’s a fact not all agencies will admit: Google Ads works better for some industries and businesses than others.

To help you work out whether Google Ads could be right for you, take a moment to consider whether potential customers are searching online for the type of product/service you offer.

If they are, Google Ads could be delivering them to your website and winning you new business.

If you’re still not sure, why not get in touch and ask for our opinion? We’re a friendly bunch and always happy to have a chat.

More than just search advertising

The Google Ads platform actually allows for more than just search ads.

  • Display ads are banners and videos that show across millions of websites and apps (including YouTube), targeting people based on their online behaviour.
  • Remarketing ads are a subset of display advertising. These target people who have previously visited your website.
  • Shopping ads are image-based ads that promote individual products right when people are searching for them.

Oh, and there’s considerably more to search advertising than we’ve covered here.

But the key takeaway we want you to have is this: Google Ads has the power to generate a fantastic return for you, so long as you’re willing to invest the time to do it right.

Jonny Hyams

Creative and data savvy in equal measure, Jonny is a dream team member for any PPC agency. A fan of zombie movies and loud, shouty music, Jonny is also renowned for his Halloween dress-up skills, and unhealthy love of Coca Cola.

Leave a Reply

Your email address will not be published.