What is Google Ads and how does it work?

With the Google Ads ad­vert­ising platform, the search engine operator offers the ability to manage campaigns and enhance them with mul­ti­me­dia ads in the Google Display Network.

Key Takeaways ⓘ

Google Ads is Google’s central platform for search engine ad­vert­ising, with ads in Google Search, on YouTube, and across the Display Network.

• Key formats include Re­spons­ive Search Ads (RSAs) and Re­spons­ive Display Ads.
• Ad delivery is based on keywords, auto­ma­tion, and an ad auction that de­term­ines Ad Rank.
• Costs are incurred through models such as CPC, CPM, or CPA within defined budgets.
• Per­form­ance is measured with Google Analytics 4 (GA4) and Consent Mode v2.

What is Google Ads?

Google Ads, known as Google AdWords until 2018, is Google’s central platform for search engine ad­vert­ising. Over the years, it has developed into the world’s largest online ad­vert­ising network, allowing busi­nesses to place ads in Google Search, on YouTube, and across millions of partner websites.

Through Google Ads, ad­vert­isers can manage campaigns for Google Search and seam­lessly expand them to include place­ments on the Google Display Network and YouTube. This makes it possible to pursue a wide range of marketing ob­ject­ives—from in­creas­ing reach to driving specific con­ver­sions—within a single, central platform.

Ad formats in Google Search

Google Ads allows ad­vert­isers to place ads on Google search results pages, as well as on platforms such as Google Play and Google Shopping. These ads are displayed above and below the organic results on Google’s search engine results pages (SERPs). In addition, Google Ads works with a range of partner search services to extend ad reach.

Within the search network, Re­spons­ive Search Ads (RSAs) are now used almost ex­clus­ively. Ad­vert­isers submit several headlines and de­scrip­tions, which Google then auto­mat­ic­ally combines to generate relevant ad vari­ations. The following character limits apply:

• Headlines: max. 30 char­ac­ters
• De­scrip­tions: max. 90 char­ac­ters
• Path: max. 15 char­ac­ters

Ad formats in the Google Display Network

Google Ads’ reach is not limited to the search engine. The Google Display Network enables ad­vert­isers to place ads on Google services like Gmail or YouTube as well as on various third-party sites. In addition to text ads, ad­vert­isers also have mul­ti­me­dia ad formats available here.

Instead of static banner formats, Re­spons­ive Display Ads are pre­dom­in­antly used today. These ads auto­mat­ic­ally adapt to different place­ments, devices, and screen sizes.

• Image ads: Banner ads are still based on stand­ard­ised formats, but are delivered and optimised auto­mat­ic­ally.
• Video ads: Google Ads offers various video ad formats, including in-stream ads, in-feed video ads, and video ads in YouTube Shorts. These can be served on their own or as part of modern campaign types.

How Google Ads works

The stated goal of Google’s ad­vert­ising network is to deliver the most relevant ads possible. For this reason, Google Ads campaigns are keyword-based, but today they also take user signals, context, device type, location, and the time of the search query into account.

While in­di­vidu­al keywords used to be the key factor, Google Ads today relies heavily on auto­ma­tion and machine learning. Ads are served dy­nam­ic­ally to maximise the like­li­hood of a desired action—such as a purchase or an enquiry.

Keywords

The core idea behind Google Ads is to place ads in a way that feels helpful rather than dis­rupt­ive, offering added value to users. Keywords still play a role in assigning ads to topics and matching them to relevant search queries. They can consist of single terms or longer keyword phrases that potential customers use when searching for products or services. However, the success of a Google Ads campaign today no longer depends solely on manual keyword selection. Instead, it is driven by the in­ter­ac­tion of search intent, auto­ma­tion, and data.

In modern campaigns, broad match keywords are fre­quently used in com­bin­a­tion with automated bidding strategies to capture relevant searches. This approach also allows ad­vert­isers to reach se­mantic­ally related queries without relying on exact, pre­defined keywords.

The Keyword Planner remains a helpful tool for eval­u­at­ing keyword ideas, search volumes, and com­pet­i­tion. For ongoing op­tim­isa­tion, however, actual search queries and con­ver­sion data are far more valuable than forecasts alone.

Ad auction

Google decides which ad is served for an ad-relevant keyword based on what is known as an ad auction. This process de­term­ines the ad rank, which decides whether an ad appears and in what position.

Key factors include:

• the ad bid
• the Quality Score
• ad ex­ten­sions
• con­tex­tu­al and user-related signals, such as device or location

Quality Score remains relevant, but today it is sup­ple­men­ted by automated op­tim­isa­tion and data-driven models.

Costs

To determine the costs of an ad campaign in Google Ads, ad­vert­isers can choose from various bidding and billing models. Today, there is less manual bidding and a greater focus on automated strategies that align with defined campaign goals.

Costs can still be grouped according to different billing models:

• CPC (cost per click): With cost-per-click pricing, ad­vert­isers pay only when a user clicks on an ad. The actual CPC is de­term­ined by the ad auction and is often lower than the maximum bid set. Search campaigns are commonly billed on a CPC basis.
• CPM (cost per mille): Cost-per-mille pricing is based on im­pres­sions. Ad­vert­isers define how much they are willing to pay for 1,000 ad im­pres­sions. This model is mainly used for display and video campaigns, for example to increase brand awareness.
• CPA (cost per ac­quis­i­tion): This model focuses on specific actions, such as purchases or enquiries. Today, CPA is usually not a fixed price per con­ver­sion but a target value used by automated bidding strategies.

In addition, automated bidding strategies such as Target CPA or Target ROAS are widely used. Here, Google auto­mat­ic­ally adjusts bids to achieve pre­defined campaign goals, taking numerous signals into account, including device, location, time of day, and user behaviour.

To ensure full control over spending, Google Ads campaigns are managed using in­di­vidu­al budgets. Ads are displayed only until the defined budget is reached.

Per­form­ance meas­ure­ment, tracking, and data privacy

Following the in­tro­duc­tion of the UK GDPR and the Data Pro­tec­tion Act 2018, as well as growing browser re­stric­tions on third-party cookies, tracking in Google Ads has changed fun­da­ment­ally. Tra­di­tion­al cookie-based meas­ure­ment is in­creas­ingly being replaced by cook­ie­less tracking, which relies on modelled data, consent signals, and server-side solutions. As a result, reliable per­form­ance meas­ure­ment now requires new technical and or­gan­isa­tion­al ap­proaches.

Google Analytics 4 (GA4) has become the central standard in this context. Its event-based data model and direct in­teg­ra­tion with Google Ads make it possible to record con­ver­sions, analyse campaign per­form­ance, and optimise campaigns based on data-driven insights.

In the UK, privacy-compliant tracking is governed by the UK GDPR and the Privacy and Elec­tron­ic Com­mu­nic­a­tions Reg­u­la­tions (PECR). While Consent Mode v2 is not legally mandated under UK law, it is widely used to help align Google Ads and GA4 with user consent pref­er­ences under UK GDPR and PECR. It also enables the use of modelled con­ver­sion data when consent is limited. Following amend­ments in­tro­duced by the Data (Use and Access) Act 2025, PECR now includes a narrow exemption for cookies used solely for stat­ist­ic­al purposes to improve a website. Ad­vert­ising and re­market­ing cookies, such as those used by Google Ads, still require prior consent.

In addition, server-side tagging is gaining im­port­ance. It offers greater control over collected data, improves meas­ure­ment stability, and helps or­gan­isa­tions align tracking and per­form­ance meas­ure­ment with UK data pro­tec­tion re­quire­ments.

Boost a website’s success with Google Ads

Before ad­vert­isers launch an ad campaign with Ads, they need to define the goals of this marketing measure. Typical ob­ject­ives are:

• Increase brand awareness
• Increase website traffic
• Generate leads
• Drive sales
• Drive visits to brick-and-mortar stores

Google Ads offers enormous reach and a wide range of options for reaching potential customers at exactly the right moment. At the same time, using the platform suc­cess­fully requires clear strategic planning, a clean setup, and reliable per­form­ance meas­ure­ment. Legal re­quire­ments—es­pe­cially those related to data privacy—must also be con­sidered from the very beginning. Busi­nesses that con­sist­ently align their ads with defined marketing goals, make effective use of modern auto­ma­tion features, and regularly review and optimise their campaigns can use Google Ads both ef­fect­ively and cost-ef­fi­ciently in the long term.