Google Ads’ whole supply and demand approach can often feel unclear. It’s like playing chess, except with far more arithmetic. And if math isn’t your favorite subject, it might not be the most exciting concept to grasp. But once you understand it, this approach is rather amazing.
So, supply and demand. Though you’ve heard these terms a million times, how does it really relate to Google Ads? More importantly, how can you find out whether you are about to enter a market that is either chilled or competitive? The truth is this.
The Magic Formula for Competitiveness
Alright, here’s the geeky side of things (though I guarantee it’s worthwhile). There’s a little formula that indicates Google’s market’s degree of competitiveness. Ready? Here it is:
(Summary of competitor impression share × top-of-page rate) ÷ industry search volume
Indeed, it sounds like something you would find on a whiteboard in a science fiction film, but let us dissect it.
The Impression Share is the frequency with which competitor ads show up. They are essentially everywhere if their impression share is 95%. Like it is impossible to avoid them. 95% of the time someone searches for a keyword they are bidding on, they show up.
Their aggressiveness is shown by top-of-page rate. Are they gunning for that top real estate item among the search results? Their top-of-page rate indicates they are not playing about; they want to be seen.
The industry search volume is the overall count of searches conducted for that keyword or set of keywords. Consider it the pie everyone is vying over.
Mashing these together helps one to understand the level of market competitiveness. And the best thing about it is Google Ads allows you to create a custom column to quickly “gut check” market competitiveness. Right? Handy?
What Then is the Deal with Supply?
Alright, let’s discuss supply. In Google Ads, supply is more about the auction dynamics than it is about widget count or taco availability. In particular, three things:
One is how many rivals are bidding on the same keywords as you? Just you and a few others would be great. If it is you and, say, twenty others? Yes.
Two: Like we mentioned before, search impression share indicates the frequency of competitor presence in the auctions. Are they prevailing? Alternatively, just dipping their toes in.
Third: Top-of-page rate: How often are they grabbing those much sought-after top spots? To be really honest, nobody is scrolling to page two. (Do you? Not sure, me neither.)
Three times three will help you to understand the current market supply. “Hey, is there room for me to squeeze in here, or is this market already packed tighter than a rush-hour subway?” essentially asks.
Oh, and quick tip: It’s the same concept if you’re looking at the total impression share of competitors rather than their count. You simply cut the data somewhat differently.
And Concerning Demand?
Demand is where things get fiery nowadays. This is entirely based on the actual keyword search count among people. You know, at two in the morning the people out there Googling “pet insurance” or “best pizza near me.”
The interesting thing is that the market really becomes less competitive if demand—that is, search volume—increases but supply—that is, the number of competitors and their degree of aggressiveness—stays the same. What then? Since more pie is still to be eaten. Everybody gets a piece without having to argue over crumbs.
Right on the dashboard, Google Ads shows search volume data ranging from 1 to 100. Thus, your indication to pay attention is a rising search volume for a keyword. Usually, more demand indicates more opportunity—at least until everyone else picks it up.
The Greater View: Competitiveness Through Time
The thing is, competitiveness is dynamic. It varies—sometimes gradually, sometimes overnight. Hello, holiday season—you will see spikes at specific times of the year and a slow creep over time as more advertisers enter the field.
And in times of increasing competitiveness? Generally speaking, CPCs—cost-per-click—follow. Not always precisely, but prices usually rise if more people are bidding on the same keywords. That’s just how auctions operate. More bidders, higher stakes.
Why This Matters
Why then should you give all this any thought? Since it’s not only about hoping for the best and lavishing money at Google Ads. Knowing supply, demand, and competitiveness will enable you to make better choices. It indicates whether you are about to squander a lot of money trying to outbid giants or whether you are entering a market where you can really influence things.
The worst part is that this competitiveness measure is not a one-time event. You have to watch it over time. Trends change, fresh competitors join the field, and search behavior changes. Watching this will enable you to remain ahead of the curve.
For more insights on digital marketing with AI, visit our dedicated resources. Additionally, explore Instagram marketing strategies to enhance your campaigns.
For further reading about Google Ads and competitiveness, consider checking out trusted sources like Moz or Search Engine Journal.
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