Quality Score affects virtually all the important metrics of a PPC campaign, including:
Each time a user conducts a search, Google AdWords conducts an internal ad auction to determine which advertisers have ads it deems eligible (relevant enough) to appear alongside the user’s search results. Google has publicly stated on numerous occasions their underlying belief that it’s better to display no ads at all than to display irrelevant ads (and in doing so, potentially lose an opportunity for incremental revenue). Quality Score partly determines if a keyword is relevant enough, and hence eligible to enter an ad auction. The more times an advertiser’s ads are deemed eligible to enter the auction, the more impressions (and hence, the more exposure) they will receive.
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Previously, eligibility to enter the ad auction was determined by a minimum bid that was assigned to each keyword. The minimum bid was the inverse of Quality Score – the higher a keyword’s Quality Score, the lower the minimum bid, and vice versa. An advertiser’s keyword would be considered eligible provided the maximum bid was higher than the minimum bid. Recently this concept was revised and Google introduced a new metric called minimum first-page bid estimate, which is an estimation of the bid amount required for an ad to show on the first page of search results if a search query exactly matches your keyword. The estimate is based on the Quality Score and current advertiser competition for that keyword.
Thus, a higher Quality Score results in both a lower minimum bid and minimum first page bid estimate, both of which are related to the amount of exposure and impressions your ads are likely to receive on Google.
To determine ad rank (or ad position), Google simply multiplies your maximum CPC bid by your Quality Score. It’s obvious that a high Quality Score can significantly affect the positioning of your ad.
Figure 3: Ad rank is calculated by multiplying maximum CPC bid by Quality Score. To avoid continually raising maximum bids while achieving higher ad positions, you must improve your Quality Score.
Thus, it’s entirely possible for an advertiser with a lower bid and higher Quality Score to have a higher ad rank than an advertiser with a higher bid and lower Quality Score.
Quality Score determines how much you pay per click through this formula: (Ad rank to beat/Quality Score) + $0.01 = Actual CPC. It becomes obvious when looking at this formula how much of a role Quality Score plays in determining your costs per click. This also means that by pursuing an effective strategy to raise your Quality Score, you may find yourself paying less per click than your maximum CPC bid. Here’s an example:
Figure 4: The formula for calculating Cost-Per-Click (CPC) on Google AdWords.
Even though Mary’s $2 bid is less than Tom’s $4 bid, Mary’s Quality Score is much higher. Since Tom’s ad rank of 16 is the one to beat, 16/10= $1.60 + $0.01 = $1.61. Mary pays far less than Tom and enjoys a higher ad rank.
Google sometimes elects to display certain sponsored ads in the highlighted region above the search results. These positions are particularly valuable to advertisers because they are prominently positioned on the page. Given their prominence, it’s especially important that these ads be high quality; therefore Google places extra emphasis on Quality Score when determining which ads to show in this location.
To appear above the search results, ads must meet a certain quality threshold. In the past, if the ad with the highest ad rank did not meet the quality threshold, Google may not have shown any ads above the search results. But now, Google will allow an ad that meets the quality threshold to appear above the search results even if it has to jump over other ads to do so. Because premium ad positioning cannot simply be bought by raising bids, it is yet another compelling incentive for advertisers to focus on improving Quality Score.
Quality Score obviously has an enormous impact on every aspect of your PPC campaigns, and by this point you can probably imagine the cost and positioning advantages you can enjoy as a result of improved Quality Scores.
But what do you do with all this information? How do you actually improve your Quality Score? Download the free whitepaper! Hacking Google Ads: How to Get a Near-Perfect Quality Score
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