How Do Google Ads Work?

You’ve probably heard the word ‘Google Ads’ (previously known as Google Adwords) been thrown around often when looking up ways to market your business online but do you keep asking yourself the question ‘how do Google ads work?’. Well, with our years of experience with the advertising platform we thought we’d give you the quick low-down of what Google ads is, how it works and how you can start using it today! 

What are Google Ads?

Google Ads approaches Google as a giant, online auction, where space is always limited. Users bid on the chance to appear at the top of the search results page, when users search for a key word or phrase related to your business. When it comes to cost, you choose a set daily budget from which an amount (or Cost Per Click) is deducted every time someone clicks on your ad. This ad will then take them to a landing page (website URL) you’ve chosen.

Google Ads offers a quick response to your online marketing strategy as you can start getting clicks in as little as 3 hours after you have set up your ads account. You can also easily calculate your ROI, because of its costing structure.

The immediacy of Google Ads makes it a great way for new businesses to generate traffic, leads, new customers and sales. However, for long term, sustainable success, you also need SEO to rank organically on Google. You can read more about how to rank for SEO in our SEO Tips & Checklist blog post.

Now onto answering ‘how do Google Ads work?’…

Google Ads Account Structure

A Google Ads account is broken into different campaigns, ad groups, ads, keywords and extensions.

google ads structure


When it comes to campaigns you would break up your account into different campaigns specifically based on your business. You could have separate campaigns for the different locations that your business is based in. This is useful as you can assign more budget to popular locations and less budget to ones that are less popular. Or if you are wanting more visibility for your less popular locations you could assign more budget to them, without the worry that your budget will all be used on your well-performing locations.

You could also break your campaigns up into the different services/products that your business offers. This is helpful as you can finely target different areas of each service offering of your business.

Ad groups

Inside each of your campaigns you have multiple ad groups.

Again your ad groups can be separated into different locations, service offerings or specific keywords. Each ad group contains ads that are targeted at the same things. Make sure each ad group is unique and does not contain the keywords of any other ad group.

*Pro Tip* Try and limit yourself to 7-10 ad groups per campaign. If you can’t do this maybe think of creating a new campaign.


Ads are what your users are going to be seeing and clicking on. You should have at least 3 ads in each ad group to allow for variety and testing to see which ad is more popular. The ads in your ad group will have the same targets just different text.

An ad contains 3 things. Headlines, descriptions and a URL. These can all be edited by you when creating an ad.

how do google ads work

Google allows for Search ads (found on Googles search results page in text format) and Display ads (found on the vast display network- the websites/apps your customers visit, usually in an image format). Here we’ll focus on showing you the different search ad formats.

There are different types of search ad formats that Google offers you to choose from.

The normal ‘text ad‘ allows for 3 different headlines (30 characters each), 2 descriptions (90 characters each) and a URL.

Google also gives you the option of a ‘responsive search ad’. Responsive search ads allow for your ads to have more variety. For these ads you can input 15 different headlines and 4 different descriptions, which will be shown to users in different combinations allowing for more relevant messages to be shown to your users.

Google also allows for ‘dynamic search ads’. These are ads based on the content of your website which is then matched to the search terms of users. This means you have little control over what users will see, but you do have control over the specific pages of your website that you want Google to target.

Google also gives the options of location ads and call ads. These are different from the other ad types as they will feature either in Google’s snack pack (or local listings) or just contain your business’s phone number and URL.

how do google ads work


*Pro Tip* Use at least 2 text ads and 1 responsive search ad in each of your ad groups.


Keywords are what make or break your ad account and are usually the first place you need to look when wanting to fix your ad account. The keywords you choose for each ad group tell Google what keywords your ads must show up for ie. if you use the broad keyword ‘handbags’ then your ad is going to be competing against alot of other websites/shops trying to sell or talk about handbags.

Therefore, the keywords you choose come in different match types depending on how broad or exact you want Google to feature your ads for that keyword. There are four different match types that Google allows you to choose from which are: broad, phrase, exact and negative keyword match types.

  • Broad Match Keywords

This is what Google has to say about broad match keywords:

When you use broad match, your ad is eligible to serve when someone searches for relevant variations of your keyword. This helps you attract more visitors to your website, spend less time building keyword lists, and focus your spending on keywords that work.”

Let’s look at handbags again… If you were wanting to gain more customers to your website and have a bit of budget to spend then you could just use the broad keyword ‘handbags’. Therefore, when people type in anything relating to handbags your ad will show up ie. leather handbags (even if you don’t offer leather handbags).

This can be a dangerous use of your budget as these keywords are not specific enough and you could be using a large portion of your budget on clicks you don’t want.

What’s important to note is that broad match keywords are the default match type if you don’t specify any other match types. We’ll show you how to do that now.

*Pro Tip* Instead of using broad match keywords to reach a larger audience use modified broad match. Modified broad match keywords tell Google that you only want your ad shown if all the keywords you specify are shown at some point in the query. You specify this by using the + symbol. Here’s an example: If you want your ads shown for handbags in South Africa (because you don’t offer international shipping) then your keyword would be typed in like this: +handbags +in +south +africa. For each keyword you want your ad shown for you would put a ‘plus’ sign.

  • Phrase Match Keywords

The next match type is phrase match. You specify your phrase match keywords by putting “inverted comma’s” around the key phrase you want to be shown for. Here’s an example from Google:

phrase match keyword

With phrase match you specify the exact phrase you want to be shown for, while also allowing words before and after them. This is a good keyword variant to use as it is more specific than broad match but also more flexible than exact match keywords.

  • Exact Match Keywords

The next match type you can use is exact match. Of all the match types, exact match gives you the most control over who see’s your ads and who you specifically want to see your ad. Similar to phrase match you would put the exact keyword/phrase in [square brackets] and your ad will feature in any search results containing that keyword exactly (with close variations ie. misspellings, plural forms etc. with no keywords before and after). Here’s another example from Google:

exact match keyword

  • Negative Keywords

The last keyword match type is the negative keyword match type. Negative keywords are added to your negative keyword lists specific to your campaign or ad group. Negative keywords tell Google that you do not want your ad to feature in the search results of that search query. Popular negative keywords are ‘free’ or ‘cheap’ and for your handbag business that doesn’t sell leather handbags then ‘leather’ would be added to your negative keywords.

*Pro Tip* Negative keywords are very important to your ad account and must be updated monthly, if not weekly. You can find negative keywords under ‘search terms’. These are search queries that users have typed into Google and then clicked on your ad which was shown. These are very helpful to find new keywords and to see what people are looking for, but they are also helpful to show which search terms you don’t want to be featuring your ads in. This could be the case if people are searching for competitors or for different locations or services you do not offer.

how do google ads work


Google Ads extensions are an added extra to your ad and make it easier for users to navigate to specific pages on your website, find your location or even enable users to call you directly from your ad. They also enable you to show the special features of your business and any promotions that you currently have running. Here we look at the different extensions you can set up with your Google ads account.

  • Sitelink Extension – Direct people to specific pages on your website
  • Callout Extension – Callouts give you more space to add text. They give more detailed information about your business, products, and services eg. free shipping, wifi included etc.
  • Structured Snippet Extension – Structured snippets show underneath your ad text in the form of a header and list eg. locations: Durban, Johannesburg, East London
  • Call Extension
  • Lead Form Extension
  • Location Extension
  • Price Extension
  • App Extension
  • Promotion Extension

*Pro Tip* You should always create sitelink, callout and structured snippet extensions. These add greatly to your ad, make it appealing to users and work well at gaining conversions.

And there you have it a simple Google Ads account structure and how it works! This is of course just step one of exploring and using Google Ads but the more familiar you are with the structure of your ads account and the more organised the better! Get this step right and you’ll make your Google Ads journey a success!

Want to try your hand at setting up your own Google Ads account? Try here, it’s pretty simple to do, but optimising it is where expertise comes into play. Contact us today to start featuring your ads on Google or schedule a free strategy call with our Google Ads consultants now!