How The Google Ads Algorithm Works In 2023

How The Google Ads Algorithm Works In 2023

The Google Ads algorithm works in mysterious ways.

Or so we thought until recent years.

You see, the ad algorithm never really revealed how the algorithm truly works.

Sure, they mention the basics such as the bids or the budgets or the ‘quality score’ but exactly how does all this work?

How do these values actually change the way our ads perform or our eCommerce brands scale?

Before we dive deep into the intricacies of the algorithm, let’s understand the logic.

Logic Behind The Algorithm

Many eCommerce store owners believe that the algorithm doesn’t have a brain of its own.

They think that it’s just a bunch of code that takes in input from the data you feed it. The metrics within your Google ads account.

To a certain extent, this is true.

However, the recent shift towards AI has actually changed the way the algorithm ‘thinks’.

Now, the algorithm tries to get a full understanding of the business from all sides and angles.

How your brand fits into their ecosystem along with whether your products even deserve to be shown in the first place.

Keep in mind, the algorithm was designed to provide Google’s users the best possible experience.

The same users that shop on the platform itself.

This means that along with having a powerful Google ads strategy, a proper foundation is needed to really grow with Google ads.

A well rounded experience.

And this is exactly where it differs from other ad platforms.

Google Ads Vs Everything Else

Let’s compare Google to other ad platforms really quick so that you can get a full understanding of how it works.

The most commonly used ad platform besides Google ads is Meta ads (Facebook ads). With Facebook, the entire approach is different.

Many eCommerce store owners fail to understand that Facebook is a social media platform. Google ads is a search based platform.

Users don’t go on Facebook to purchase.

They go on Google to search for a product they potentially want to purchase.

Due to this, Facebook ads advertisers put more of an emphasis on the front end offer.

The ad copy. The video or image ad.

And if this is good enough, a user that didn’t originally plan to purchase the product may change their mind.

With Google, users already want the product.

Half the battle has been won there.

Now, it’s more about having a proper foundation that makes users feel safe enough to purchase.

There is no ad copy in the mix (at least for Google shopping ads) and the entire process is shortened.

This is where the true reliance on a strong foundation comes into play.

Success Determining Factors


That was a lot.

Hopefully, it’s clear how the algorithm functions on the backend. And if it’s not, we suggest going back and reading the fundamentals again.

Because this directly takes us to the discussion regarding factors which determine Google ads success.

As we mentioned earlier, the foundation plays a key role in determining if your Google ads campaigns succeed or not.

Proper SEO techniques for the titles.

High quality images that make the product not only have a greater perceived value, but also helps it stand out from the competition.

A description that’s eloquently written with proper copywriting & SEO techniques.

And finally, a good use of Google Merchant Center programs.

Having all of these things in check is the first part of success with the foundation.

The second part is the front end funnel – the Google ads strategy itself.

This is where most eCommerce brand owners go wrong.

They believe the right ad strategy means the highest bid or budget. But the reality is, bidding the most or spending the most is a losing strategy.

There comes a point when the input in terms of bids & budgets has diminishing returns.

After that, any increase in bids or budgets leads to the same (or even less) amounts of traffic and conversions.

Bad idea.

And while Google ads doesn’t want you to guess the perfect bid or budget, it does want you to slowly make your way there.

But this brings forth the question..


By starting smaller than your goal.

If your goal is to spend $1,000 a day with Google ads, you should be starting the campaigns at 25% – 50% of the spend goal.

In this case, if my main campaign were to be a Performance Max campaign, the budget would be $250 – $500 per day.

As for the bid, we normally find more success with not setting a TROAS for smart bidding campaigns.

This just allows the campaign to go out and find the right audience at a quicker pace.

For standard shopping campaigns, you want to ideally start at around the $0.45 – $0.70 range for bids.

(Just a general range we determined based on $5m of adspend)

This completes the second part of the factors that determine success for the algorithm.

How Your Brand Can Influence The Algorithm

So far, we’ve covered the outline of what makes the algorithm tick.

Let’s dive deeper into how your brand can directly influence the functionalities of the algorithm.

At the end of the day, Google’s goal is to give their users a positive experience.

Users that use the search platform to find things.

This can only happen when the brand using the platform is reliable.

When it spends enough money. When it delivers on time.

The basics of running a successful eCommerce business.

To positively influence the algorithm and get it on your side, you need to start with the basics.

From the landing page.

This may require research, but really give your customers the experience they’re expecting.

If your brand is serving an elderly niche, make the colors light. The buttons easy to click.

If it’s serving a gothic niche, make the colors dark.

The goal here is to match what the audience wants to see.

This is really the only way to get users staying a long time on the website.

Once on the website, you need to focus on moving them through the funnel.

Landing page -> Add to cart -> Checkout -> Purchase

This means that along with the right landing page layout, your brand also needs to showcase the product they saw via Google shopping (or search).

Making improvements on the frontend will lower the bounce rate, which is a direct signal to the algorithm that something’s working.

On the ads side, start by testing segregation based strategies with products that have proper SEO techniques and images.

Segregation includes things such as separate shopping campaigns based on collections or profit margins or anything else that makes sense.

Just running the right campaigns or product strategy isn’t enough, however.

This needs to be followed by consistent and ongoing optimizations.

Using the data coming in to make things better in the backend.

Every 7 – 14 days, we exclude products, improve titles / descriptions, A/B test product images, and much more.

All depending on what the results say.

This is what the algorithm wants.

Closing Thoughts

Dealing with the Google ads algorithm is tricky, but not impossible.

Many eCommerce brands only focus on the surface level stuff such as bids and budgets, leading to lots of unreached potential.

And as we learned, the surface level stuff is only a small part of the entire equation.

How well your ad looks matters. How strong your foundation is matters.

All the small details.

So if your eCommerce brand is struggling to scale to the next level or has not achieved any considerable level of scale, don’t panic.

Instead, take this time to begin working from the ground up.

And if you need help getting this done and are already doing $40,000+ per month in revenue, let’s work together to scale your brand to the next level with Google ads.

Our Google ads agency can not only help build your brand a solid foundation, but also implement all the right ad strategies and techniques needed to scale.

Just like how we’ve done it for 109+ other eCommerce brands.

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Shri Kanase

His deep desire for purchasing video games at an early age introduced him to the different ways of doing business online and eventually led him to open his first few Shopify stores.

As of today, along with running Google Ads for our clients, Shri Kanase runs his own personal eCommerce brands and travels the world.

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