1. Keyword Targeting:
Advertisers bid on keywords relevant to their business. When users search for those keywords on Google, ads appear at the top of the search results.

2. Ad Auction:
When a user performs a search, Google runs an auction to determine which ads to show. The auction considers: Bid Amount: How much you're willing to pay for a click on your ad. Quality Score: Google’s rating of the relevance and quality of your ad, keywords, and landing page. Ad Rank: A combination of your bid and Quality Score that determines your ad’s position.

3. Ad Formats:
Search Ads: Text ads that appear on Google search results pages. Display Ads: Image or video ads shown on websites within Google’s Display Network. Shopping Ads: Ads featuring product images and prices, ideal for e-commerce. Video Ads: Ads that appear on YouTube.

4. Ad Extensions:
You can enhance your ads with additional information, such as links to specific pages, call buttons, or reviews.

5. Cost:
You set a daily budget and bidding strategy (manual or automated). Costs are controlled by your bids and Quality Score, influencing how often your ad is shown.

6. Click and Conversion Tracking:
Once your ad is clicked, the user is taken to your website or landing page. You can track conversions (sales, sign-ups, etc.) using Google Analytics or Google Ads’ conversion tracking.

7. Continuous Optimization:
Based on performance data, you can adjust your ads, keywords, bids, and targeting to improve results and lower costs. This combination of targeting, bidding, and optimization allows businesses to reach potential customers actively searching for products or services.