What is Google AdWords?
Google AdWords is Google's online advertising program, it enables you reach new customers and grow your business. You choose where your ads appear, you set a budget you're comfortable with, and measure the impact of your ads. There's no minimum spending commitment and you can pause or stop anytime.
You reach people who are searching for your products and services, and people browsing websites related to what you sell. Adwords is cost-per-click (CPC) bidding so you're charged only when someone clicks your ad.
Keywords are words or phrases that you choose that trigger your ad to show up. Keywords can appear next to search results on Google and other search sites. But keywords can also trigger your ads to show up on other sites across the Internet. Google-owned properties like YouTube as well as Google partner sites like NYTimes.com, Families.com and more. There are called placements, which are part of whats called the Display Network.
Now suppose that multiple advertisers use the same keywords to trigger their ads or want their ads to appear on the same websites. Google uses Ad Rank to determine whose ads will appear, and in what order.
Your Ad Rank is based on a combination of:
Your bid - which is how much you're willing to spend
The quality of your ads and website
Expected impact from your "ad extensions" and other ad formats
Your bid and ad quality can work slightly differently across different campaign types.
Each time an AdWords ad is eligible to appear for a search, it goes through the ad auction. What you’re charged (your actual CPC) is often less than your max. CPC bid because, with the AdWords auction, the most you'll pay is what's minimally required to hold your ad position and any ad formats shown with your ad, such as sitelinks.