Skip to main content

How does the Google Ads auction system work?

 The Google Ads auction system determines which ads appear on a search results page, in what order, and how much advertisers pay. Here's a breakdown of how it works:

1. A User Triggers a Search

When someone searches on Google, the system scans its pool of advertisers bidding on keywords relevant to that query.

2. Eligibility & Ad Rank Are Calculated

For each ad, Google calculates something called Ad Rank, which decides:

  • Whether the ad is shown at all

  • Its position on the page

Ad Rank is based on:

  • Bid Amount: How much you're willing to pay per click

  • Quality Score: Based on:

    • Expected Click-Through Rate (CTR)

    • Ad Relevance to the search

    • Landing Page Experience

  • Ad Extensions & Formats: Use of site links, callouts, etc.

  • Context of the Search: Device, location, time, search intent

3. Highest Ad Rank Wins, But It's Not Just the Highest Bidder

You don’t need the highest bid to win. A more relevant ad with a better Quality Score can beat a higher bidder.

4. Cost is Determined (Second-Price Auction)

You don’t pay your full bid. Instead, you pay just enough to beat the Ad Rank of the next highest competitor — not necessarily your full bid.

Formula:

Actual CPC = (Ad Rank of the competitor below you ÷ Your Quality Score) + $0.01

5. Ad is Displayed

Google displays the top ads, often above or below organic results.

Example:

  • Advertiser A bids $4, Quality Score = 10 → Ad Rank = 40

  • Advertiser B bids $6, Quality Score = 5 → Ad Rank = 30

Result: Advertiser A wins the top spot, even with a lower bid.

Popular posts from this blog

How does BGP prevent routing loops? Explain AS_PATH and loop prevention mechanisms.

 In Border Gateway Protocol (BGP), preventing routing loops is critical — especially because BGP is the inter-domain routing protocol used to connect Autonomous Systems (ASes) on the internet. 🔄 How BGP Prevents Routing Loops The main mechanism BGP uses is the AS_PATH attribute . 🔍 What is AS_PATH? AS_PATH is a BGP path attribute that lists the sequence of Autonomous Systems (AS numbers) a route has traversed. Each time a route is advertised across an AS boundary, the local AS number is prepended to the AS_PATH. Example: If AS 65001 → AS 65002 → AS 65003 is the route a prefix has taken, the AS_PATH will look like: makefile AS_PATH: 65003 65002 65001 It’s prepended in reverse order — so the last AS is first . 🚫 Loop Prevention Using AS_PATH ✅ Core Mechanism: BGP routers reject any route advertisement that contains their own AS number in the AS_PATH. 🔁 Why It Works: If a route makes its way back to an AS that’s already in the AS_PATH , that AS kno...
Read more

What’s the impact of BGP full routes on router memory and performance?

Receiving full BGP routes (i.e., the full global BGP routing table) has a significant impact on a router's memory and performance. Here's a breakdown of the key impacts: 🔧 1. Memory Usage (RAM) A full BGP table typically contains ~1 million IPv4 routes and growing (~200k+ IPv6 routes). Each BGP route consumes tens to hundreds of bytes of memory, depending on attributes (AS path, communities, etc.). This translates to hundreds of megabytes to several gigabytes of RAM just for storing the BGP RIB (Routing Information Base). The FIB (Forwarding Information Base) , which is installed into the router's hardware or kernel for actual packet forwarding, also consumes memory (especially in TCAM for hardware routers). ❗ Example A router might require 4–8 GB of RAM (or more) to comfortably handle full BGP routes with headroom for growth and stability. 🧠 2. CPU Utilization High CPU load during: Initial BGP session establishment (parsing all rout...
Read more

Explain the OSPF LSDB (Link State Database) and how SPF (Shortest Path First) algorithm works.

OSPF (Open Shortest Path First) is a link-state routing protocol , and the LSDB (Link-State Database) and SPF (Shortest Path First) algorithm are core to how OSPF calculates the best paths . Let’s break them down. 🧠 What is the OSPF LSDB (Link-State Database)? The LSDB is a map of the entire OSPF network area — each router stores a complete topology of its area. 🔍 Details: Built from LSAs (Link-State Advertisements) exchanged between routers. Contains info about: Routers and their interfaces Network segments Neighbor relationships Each OSPF router maintains an identical LSDB within the same area. ✅ Key Characteristics: Feature Description Scope One LSDB per OSPF area Source Built from received LSAs Consistency All routers in an area have identical LSDBs Purpose Used as input for SPF algorithm to calculate best paths ⚙️ How the SPF Algorithm Works in OSPF OSPF uses Dijkstra’s Shortest Path First (SPF) algorithm to compute the shortest (lowest-cost)...
Read more