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Pay Less For Your Clicks in Google Adwords

by | Jul 24, 2012 | Digital Marketing, Search Engine Marketing, Search Engine Optimization

During the last month, we have been talking about The Great Performance Shuffle or key metrics that are true indications of the success of your online marketing efforts. Today, we are going to dive a little deeper into your Adwords campaign and discuss how your Keyword’s Quality Score defines what you pay for clicks and the role keyword bidding strategies play in determining your Quality Score.

Using the appropriate bidding strategy early in a Google Adwords campaign is critical to long-term success. A good bidding strategy will enable keywords within a campaign to achieve a high Quality Score (QS) at a faster rate. On the other hand, an advertiser who does not use keyword strategy best practices risks starting off with a low QS. Once Google assigns a low QS, it is very difficult to improve the QS. Even with aggressive optimizations, it’s a long and tedious process. This would be similar to running a 50 mile marathon and starting 100 miles behind the starting line.Every keyword within an Adwords campaign is assigned a QS.  When a company begins a new Adwords campaign, the QS is equivalent to the industry average QS for each keyword. Once a campaign is running, the QS is determined by an algorithm comprised of hundreds of metrics. However, the 3 main areas that Google uses to determine the QS are landing page relevance, keyword relevance and ad text relevance.

It’s very important to Google that when someone performs a search, the ads displayed are relevant to what the consumer desires to see. The QS is the metric Google uses to determine this relevancy. Google rewards advertisers who create relevant advertising campaigns by charging them less for clicks. New advertisers start out at a disadvantage because they haven’t earned the rewards Google provides to advertisers who have proven that there advertising campaigns are relevant to what consumers are searching for when performing a query.

Google uses the number of times an ad is clicked compared to the number of times an ad has appeared as a factor in determining relevancy. Studies have shown that when ads appear above the fold, they have a higher probability of being clicked.  Not only is ad placement vital to achieving a high QS, QS are instrumental in determining ad placement.

Google multiplies the maximum keyword bid by the QS to determine where on a page an ad will rank. Therefore, even though an advertiser’s bid is higher than another advertisers bid, if the first advertiser’s QS is higher, that person’s ad could be placed higher on the page. The QS x the bid amount = the ad placement score. This equation applies to every keyword that is eligible to appear. The keyword with the highest Ad Placement Score receives the best ad position (#1). The keyword with the lowest Ad Placement Score will be show in the worst position on a page (#8).

In the first example below, where two advertisers bid the same amount, the advertiser with the higher QS will receive better a better ad position because the ad placement calculation is higher. In the second example, even though the second advertiser’s bid is $.50 lower, that person would still have better ad positioning because the QS is better.

The actual ad position that will receive the most number of clicks or result in the highest number of sales is unknown at the start of a campaign or when advertising for a new product. Furthermore, when starting a new campaign or adding a new product, the exact bid amount needed to achieve ad placement above the fold is unknown. Since the necessary bid amount is dictated by competition and history, there are tools available that offer bidding suggestions on keywords. However, there are also many unknowns that skew these suggestions, such as rewards for a high QS.

Yes, I agree this process may seem very complicated or even overwhelming. The main point is that if you want to avoid the consequences of starting off in a hole (with a low QS) consider bidding a little higher than the recommended amount when a campaign first goes live, a strategy that aligns with Google’s best practices. As each keyword acquires data, you will be able to make decisions that are in your best interest. However, you don’t have to tackle this alone. There are many reputable online marketing agencies that are certified in Google Adwords and can help you achieve your desired results very quickly.


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