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Call 1-888-683-1144 for PPC Management Services |
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Catch More Flies in Your Web |
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How Does Adwords Rank Ads? |
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Adwords is not a straight bidding auction. You can be the highest bidder for a keyword, yet, not get the top spot. The position your ad appears in is determined by two factors: your bid and the quality of your ad. To quantify an adīs quality, Google created a formula they call Quality Score. There are a few factors involved in calculating the QS. For our purposes at the moment, let's assume that it is the quality as measured by your click rate. In fact, your ad's CTR is responsible for about 65% of your QS. Let's take five advertisers, their bid in cents, their CTR and resulting ad rank: |
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The two factors, bid and CTR, are multiplied together which results in a number called the ad rank. If you have a CTR of 4.3% and bidding $0.25, your ad rank is 107.5 (4.3 times 25). In order for someone to be placed higher than you, their ad rank calculation would have to be more than 107.5 and can be achieved by increasing their bid or increasing their click rate. If their CTR is only 2%, their bid needs to be at least 54 cents. However, if their CTR was 5%, they only need to bid 22 cents to be ranked higher and only 16 cents if it was 7%. In other words, Google rewards advertisers for creating good quality ads that people click on. It is therefore best to get higher click rates as much as possible since your bid can remain the same or be lowered to maintain the same ad ranking. The formula to calculate your actual cost also uses the QS and the higher it is, the lower you will pay, everything else being equal, mainly your competitorīs QS and their bid. I always advocate to improve your ads to increase your click rate. It is the smarter thing to do then simply having a knee-jerk reaction and increase your bids. Note that the above explanation is simplified. CTRs are actually normalized to remove the effects of position, since absolute CTR is affected by an ad's position. But the basis is as explained: ads are ranked by multiplying the advertiser's maximum bid with the ad's (normalized by position) CTR. By the way, every major PPC advertising system does it this way now. Yahoo, MSN and many others have followed Google's lead because it places every advertiser on the same level, no matter how much money each is willing to pay. You can be ranked higher than someone bidding more than you simply by having a better quality ad. |
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Pay per click management services relieve you of that burden so you can concentrate on your business. Affordable prices. Call us to see what we can do for you. |
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