Understanding Adwords Part 3 of 3: Google Adwords Quality Score. How Ad Ranking is Determined
Last post we talked about Click Through Rate, Quality Score how they are figured and how to improve it. But have you ever wondered exactly how each ads ranking is determined in relation to another ad? Or to put it another way, how does Google decide to show your ad at position #4, another competitor at #1, and another at #9?
Top Rankings in Adwords- Its Not Just Bidding Higher
As we've already talked about in other posts, its not just bidding the most. In fact some advertisers bidding the highest are in one of the lowest positions while some bidding the lowest may be in the highest positions. Why? Because Google rewards advertisers with high quality ads, keywords, match types, and landing pages and penalizes the lazy.
Determining Ad Rankings
In a nutshell, the two top things that determine your rankings are: Quality Score and Keyword Bid.
The equation goes like this:
Quality Score X Maximum Keyword Bid = Ad Rank Number.
The higher the Ad Rank number is not the position you will have in vs. your competitors (such as being ranked 1st, 2nd, 6th, etc.) It is simply a number in the calculation. The higher the number, the higher you will rank vs. your competition. Let's take a look at a few advertisers bidding on the same keyword:
Advertiser A Max CPC. 0.75, QS 8. 0.75 X 8= 6
Advertiser B Max CPC 0.65, QS 10 0.65 X 10= 6.5
Advertiser C Max CPC 1.50, QS 3 1.50 X 3= 4.5
Advertiser D Max CPC 0.95 QS 6 0.95 X 6= 5.7
Special thanks to the awesome explanation of this by Brad Geddes of bgtheory.com. He is the man!
Learning from the Ad Ranking Equation
In the above example, what do we see? Who will rank #1, 2, and so on? If you answered Advertiser B for the first position, you got it! As you can see, they have the highest Ad Rank Number. The rest goes like this:
#1. Advertiser B
#2. Advertiser A
#3. Advertiser D
#4. Advertiser C
What do we learn from this example and how important Quality Score is?
First of all we have to acknowledge that we just don't know what our competitors are bidding on terms, so using this equation on them is impossible. But we do learn that you can take the top position in Adwords and have the lowest maximum CPC. Why? Because you have the best Quality score in relation to your competitors.
Another takeaway is from Advertiser A. He has a good quality score of 8 for that keyword but not as good as Advertiser A. So he can either raise his quality score or his bid. We always recommend raising Quality Score but if you can't get to a Quality Score of 10 and it is economically feasible for you, you can raise for bid. As you see his bid is only a dime higher than Advertiser A's, yet he beats out Advertiser D & C who are paying significantly more.
In Conclusion: Even if you don't know what your competition is bidding knowing that where you ad ranks is a combination of Quality Score and Max. Keyword Bid shows that getting that Quality Score higher is the most important thing you can do to lower your CPCs. Keep writing and testing better ads, keywords, landing page copy and improving CTR and you'll be on your way.
What have you found regarding Quality Score and Max CPC in your accounts? Let us know!