How do ad auctions work?

In a typical ad auction model, advertisers bid a maximum value in advance for a particular keyword in a specific type of placement.

When an ad placement opportunity is triggered (a user search engine query matches a bid keyword, or a user visits a website containing a bid ad placement unit), a real-time auction occurs.  The ad platform determines which ad is placed (or ranked in case of multiple units) by calculating a set of factors for each bid (e.g., targeting parameters, bid entered, quality factors) and displays the ad(s), all in real time.

Learn more about PPC Advertising here.