Google AdWords Quality Score Explained for Dumb Asses Like Me
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Many of us run campaigns on Google Adwords without truly understanding how the Google auction system works. We know it’s got something to do with maximum bids for CPC and Quality Score affects it somehow, but how many of us really know how it’s calculated?
Well, Google’s Chief Economist, Hal Varian, has taken to YouTube to explain exactly how the AdWords Ad Auction works and how your max CPC bid and quality score determine how much you pay for a click on Google.com.
He stresses right at the beginning that the Google AdWords system is dependent upon three things: the advertiser, the user, and Google. The advertiser wants to show relevant ads, so they will get good results. The user wants to see good ads that show them what they’re looking for. And Google wants both the user and the advertiser to get what they want so that they’ll keep coming back to Google.
Varian then explains how the maximum bid system really works, in the most straightforward way. He points out that even though you set a maximum bid, in most cases you don’t actually have to pay that. You just have to pay enough to beat the next highest bidder.
He then takes the user through the more complicated system of the Quality Score, and how that affects the rate that you actually pay. Going back to the example of the three interested parties, Google uses the Quality Score to make sure that the ads shown have a high ad quality, to ensure that everyone has a positive experience.
Using simple visual tools, he explains the importance and the breakdown of what affects your overall Quality Score. The single most affecting factor of the Quality Score is the click-through rate. Users are essentially voting with their clicks, and Google uses this as feedback to determine Quality Score.
Next important is relevance. Google measures how relevant an ad is to the keywords and to what the user is searching for. It keeps users from paying their way onto a keyword that has no relevance to their product or service.
Also taken into consideration is the quality of the landing page. The ad is only useful to the users if the landing page contains the information promised in the ad. The landing page must be relevant, have original content, be easily navigable, and most importantly, be completely transparent.
Varian also explains how the Quality Score affects the way the auctions run, and its role in determining ad rank. The ad rank formula is bid of the advertiser x the quality of the ad. He gives a great chart as an example to illustrate exactly how the process works in a clear and concise manner.
Once you know what your rank is, now you have to determine what you pay per click. The amount you have to pay, unless you’re in the lowest position, is determined by the Ad Rank of the person below you. Again, check out the demonstration that Varian gives; it more clearly illustrates the process than anything I could try and explain in writing.
The main point is that the higher your Quality Score, the lower CPC you’ll have to pay for premium positioning. Google makes it financially beneficial for you to offer the highest quality possible in your ads and landing pages. Again, it goes back to their philosophy of providing the best interactions possible for both the user and advertiser, which is beneficial to them as it keeps people using Google.
Take a look at the video and see for yourself. Using just a whiteboard and some magnets, Hal Varian has explained the mathematics and formula behind the Quality Score and maximum CPC and how they work in conjunction to determine your final bid price. This is valuable information to have; most of us know some of the more complicated processed that Google uses, but not how the auction process actually worked. How can we expect to get maximum results from our campaigns if we don’t know the basics of how all AdWords campaigns are built?
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font-weight:bold; text-decoration:none; } img {border:none;} John Cow dot ComGoogle AdWords Quality Score Explained for Dumb Asses Like MePosted: 26 Mar 2009 09:02 AM PDT Many of us run campaigns on Google Adwords without truly understanding how the Google auction system works. We know it’s got something to do with maximum bids for CPC and Quality Score affects it somehow, but how many of us really
get you slapped by Google. That is they can out rightly shut down your campaign. Module 7 of the PPC Classroom 2.0, shows you how to know a winning campaign from a dud. Stay tuned. P.S: You might also want to check out John Cow’s PostGoogle AdWords Quality Score Explained for Dumb Asses Like Me. aiosp_title=PPC Classroom 2.0: Google Quality Score aiosp_keywords=ppc classroom 2.0, ppc classroom, google quality score aiosp_description=Google Quality Score was introduced it because most search engine users were complaining bitterly about
Thanx… Very informative Video!
Man, that video was kick ass.
Could have saved myself years of hit and miss results and reading about 10 irrelevant books on Adwords if I had that 9 minute video earlier in my life.
Thanks for sharing in John!
Chris
Hello J… Some more info on what exactly google wants on the landing pages would have been usefull ie; the advertisers cookie policie? how cluttered do the want the offer page?
I meanth they want the offer pages… sorry
Amazing video – I’m going to need to watch it a few more times. Very good for getting the big picture of Adwords
Keep ‘em coming!
Alex
Finally someone stood out to clear the mist that is covering the AdWords market.
So important things that determine Quality Score
1. 70% CTR
2. 20% KW Relevancy
3. 10% Landing Page
Most people would be going for maximum bid after this video is broadcast.
Excellent video. Thanks John for putting it on your blog for our edification.
It was especially interesting to learn that CTR is by far the most important!
Cheers,
Tamar
Great video John,
thanks for posting. Google adwords has been unknown territory for me.
I will watch this quite a few more times.
Thanks
Peter
It’s the best tutorial I have seen on google adwords. I can surely see how I can try and reduce my adwords expense (or get more bang for the buck). My home page is the best landing page according to Google but it’s not the ’sales’ page where my adwords campaigns link right now.
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Hmm, I know about landing page and keywords relevancy but I have a little knowledge on CTR. I thought it would be more informative if CTR is further explained to think it eats 70% of the quality score.
Awesome video… However, I know about Google Quality score… But I think the most important thing in terms of ROI is CTR. How about explaining CTR more like siteupdateservice said.
Finally someone stood out to clear the mist that is covering the AdWords market.
So important things that determine Quality Score
1. 70% CTR
2. 20% KW Relevancy
3. 10% Landing Page
Most people would be going for maximum bid after this video is broadcast.