How Google Ranks Ads: a Look at Ad Rank and Quality Score in Google AdWords

Defining Google Adwords Ad Rank and Quality Score

Each time a search is conducted on Google or a Google Search Partner an auction is performed. The result of this auction determines where each AdWords advertiser’s PPC text ad will be placed on the search results page. Typically a high ad rank is desired by most advertisers since most search engine users will see and click on ads that appear higher on a search engine result page (SERP). But how are AdWords ads ranked on Google.com (This post will only address AdWords search network)? Knowing the answer to this question will help advertisers figure out what they need to do in order to achieve the rank you desire.

Very simply, Ad Rank = Bid x Quality Score. To understand what this equation means, we first need to understand Google’s Quality Score; their “secret sauce” which helps determine the relevance of a given ad relative to a given keyword search. Through this equation, Google attempts to serve the best possible ads to their users.

According to Google, Quality Score consists of the following factors:

• Your keyword’s past clickthrough rate (CTR): How often that keyword led to clicks on your ad
• Your display URL’s past CTR: How often you received clicks with your display URL
• Your account history: The overall CTR of all the ads and keywords in your account
• The quality of your landing page: How relevant, transparent, and easy-to-navigate your page is
• Your keyword/ad relevance: How relevant your keyword is to your ads
• Your keyword/search relevance: How relevant your keyword is to what a customer searches for
• Geographic performance: How successful your account has been in the regions you’re targeting
• Your ad’s performance on a site: How well your ad’s been doing on this and similar sites (if you’re targeting the Display Network)

The biggest factor Google takes into account when calculating your Quality Score is CTR. This has been the case for some time in the evolution of Quality Score, and in fact, early on the evolution of Ad Rank, the equation was simply Ad Rank = CPC x CTR.

The other factors are a bit tougher to discern, but let’s look at the basics:

The quality of your landing page: Google does not want spammy landing pages and they also take into account relevant and original copy on websites, transparency of intent, and navigability.

The relevance of the keyword and to the ads in its ad group: Basically, it’s hard to imagine one ad being sufficient to cover many disparate keywords. Google rewards good organization, and it’s a good practice to get into in general for both PPC campaigns and websites in general.

The relevance of the keyword and the matched ad to the search query: If the keywords bid on and the keywords in ads relate highly to a user’s search in Google, there is higher likelihood that entry is more relevant than if this were not the case.

Your account’s performance in the geographical region where the ad will be shown: I think of this more as a penalty marker for when ads are improperly targeted. For example, if I’m a Chicago plumber but I’m advertising in New York, it’s unlikely that my ad would provide a good experience to my visitors.

Other relevance factors: Let’s just say this – what would a secret sauce be without a little secret?

Now that we understand the factors that comprise quality score, we can take a look at Ad Rank more closely. Unfortunately, there are many levels at which Quality Score operates, but we only get direct feedback from Google on the keyword level. In order to access this information you’ll have to navigate to the keyword tab in your AdWords account, go the Columns > Customize Columns options and add Quality Score to the keyword level reports.

Once we have our Quality Score number, we can put some actual numbers into the Ad Rank equation. For this exercise, let’s say we’re a smaller advertiser bidding on “Mens Puma Shoes”. If our Quality Score is 8 and our bid is $1.00 we’ll have an ad rank of 8. Alone, this number is meaningless since there are likely many advertisers vying for positions in the ad auction. Let’s look at an example spreadsheet of several advertisers and how this will likely play out.
quality-score-calculation-picture
In this case, the highest bid does not win the top placement, but neither does the highest Quality Score. Both factors play important roles in determining which ad will receive which position in the ad auction.

The takeaway:

Positioning ads appropriately has been key to success in PPC since its inception, but it’s also important to look at other factors; namely conversion rates. Having the best possible Quality Score will be helpful in achieving your goals as an advertiser; however conversion rates should be used to dictate most of your goals.

It’s also important to understand that in order to rank in the 3 highest positions, the top ad positions that appear above the natural or organic search results, an advertiser will need a high quality score. Now, Google will only award such a position to an advertiser that meets a certain Quality Score threshold. This means, that eligibility in general, is determined by Quality Score and that a very low quality score may entirely bar an ad’s entry into a given auction.

Additionally, Quality score will affect first page minimum bid. This minimum, while always given as an estimate, is a good gauge of how likely it is that your ad will show in the premium ad placements in the SERPs. In fact, Google states: “For calculating first page bid, Quality Score doesn’t consider the ad or search query, since this estimate appears as a metric in your account and doesn’t vary per search query.” The takeaway should be this: use this metric as a guide, but always compare it to your account’s actual performance and evaluate your next move based on results rather than predictions.

The Bottom Line:

“Even if you have done everything right, you might not have a perfect Quality Score. It’s okay – you can still run a profitable marketing campaign.” – Quote from Google’s elearning on Quality Score (http://services.google.com/gap/Quality_Score/player.html). And that’s really the end of any discussion about online advertising. If you are getting a good ROI, that’s your top priority and number one goal. All other metrics should be secondary. The more you know about what goes into determining your ad position, the better you will be able to manipulate your account to achieve the results that you seek in your advertising efforts.

Bio/Signature

Nathan Pabich is the Director of Paid Search at Digital Third Coast (http://www.digitalthirdcoast.net/) located in the beautiful Bucktown neighborhood of Chicago, Illinois. He enjoys lowering client’s average cost per conversion while pumping up paid search value.

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