Google’s AdWords Ad Auction is a system developed to place the most appropriate advertisements in front of those users who are probably to be interested in exactly what the marketer has to offer. In this auction, advertisers just pay when their ad has actually been clicked by a user. This cost, and certainly where the ad will be placed on a page, is figured out by the method Google ranks ads, using the AdWords Quality Rating Formula.
Google picks advertisements’ frequency and placement based on their rank. This rank is figured out by the cost each marketer bids to spend for having their ad shown together with the quality of the advertisement, or how pertinent the ad is.
Marketers send a maximum quote amount, which is the most that an advertiser is willing to pay Google to have actually an advertisement positioned. Marketers then have their pages ranked by Google with a Rating. The higher this score is, the lower the amount that marketers invest per click, so a high rating is vital for keeping costs down.
Full service internet marketing companies like “Think Big Online” have found that Google looks at three primary factors when choosing quality: click-through rate, significance, and landing page quality. Click-through rate, which has one of the most weight, is merely the variety of clicks an ad gets, which in essence indicates online search engine users are informing Google which advertisements they believe are best. Relevancy suggests the advertisement’s keywords are as compared to the user’s search question, matching the most appropriate advertisements to each question based upon these keywords. AdWords then examines the landing page quality by taking a look at both the page content and business itself in terms of creativity and usefulness, along with how simple the website is for users to browse.
The advertiser’s quality score and maximum bid amount are increased together to determine the advertisement’s rank. For example, if a company says it will pay a maximum of $5.00, and Google determines the quality score to be a 5, the ad’s rank will be 25. Ads with greater rankings will be shown regularly and in a higher-profile position than low-scoring advertisements.
Google uses another formula to calculate exactly what price an advertiser will in fact pay for having an advertisement clicked on. The cost of an advertisement is figured out by discovering the advertisement rank of the next-lowest scoring advertiser, and dividing it by the first advertisement’s quality rating. For example, if the top-ranked advertisement had a rank of 25 and a quality rating of 5, and the second-highest scoring advertisement had a rank of 20, the top-ranked ad’s expense per click would be 20 divided by 5, or $4.00.
Confusing, however the most crucial point for marketers to keep in mind is that the Quality Score Algorithm reward ads that produce high traffic and have useful, original material by decreasing the advertisements’ cost per click. In the same manner, those that have low AdWords Quality Scores see their ads’ costs increase.