Last time in PPC Me Now, we went over how to do basic keyword research. Now that you understand how to do that, you need to set a bid for those keywords and understand the importance of Quality Scores and landing pages.
What Is a PPC Bid?
Think of PPC bids like an auction. An advertiser sets a bid for each keyword he/she wants to be in the auction for. The bid, better known as the maximum cost per click (max CPC), is the maximum amount of money you are willing to pay for a click.
When you think of auctions, you probably think of an auction similar to those in the show Storage Wars where the highest bid wins. That’s a good start! However, in order to be fair to smaller companies that could be easily be outbid by larger companies, PPC auctions are a bit different. Let me elaborate.
In the illustration above, in a normal auction, the red advertiser would have had “won” and had their ad in the first position, the orange advertiser would have been in the second position, and so on.
This is not the case for PPC platforms such as AdWords and Bing Ads. PPC platforms take into account other factors in order to determine who gets what ad position and for what price.
Additionally, Google AdWords’ and Bing’s bidding systems are unique in that you do only have to pay up to what the next highest bidder is willing to pay.
Google AdWords implements something called “Ad Rank.” This helps to calculate the rank and position of the ad. The basic formula for calculating is as seen below:
This helps to ensure a higher quality advertisement shown higher up in the search engine results page (SERP). Ad extensions factor into this formula as well. It is important to add ad extensions to every campaign.
What Is a Quality Score?
Quality Score (abbreviated as QS) is a number from 1 to 10 given to each keyword.
A great Quality Score can reduce the amount you pay per click, while a poor Quality Score can increase the amount you pay per click or even prevent your advertisement from showing. It is important to have a good Quality Score throughout because your historical Quality Score is used to calculate the Quality Score for additional keywords.
What Factors Are Used in Determining Quality Score?
The Quality Score of a keyword within the Google Search Network is determined by a few factors:
Expected Click-Through-Rate (CTR) – how often does Google think your ad will be clicked on? This differs from Actual CTR, which is what the actual CTR is.
Landing Page Experience – a landing page is the website an advertiser chooses to send a consumer to. You want highly relevant landing pages (which is why SEO works so well with PPC) containing:
Relevant and original content (no content from other sources)
Transparency about your business and how you intend to use a user’s information
Ad Relevance – Are the keywords that you are targeting relevant to the ad?
After evaluating all of those factors for Quality Score, Google goes through and assigns a number from 1 – 10 (10 being the best) to each keyword. Let’s say all of the advertisers below were bidding on the same keyword. Below is an example of the Quality Score number that Google assigned each advertiser.
Once that is done, Ad Rank for the keyword is calculated. Both Quality Score and Ad Rank are calculated whenever an ad is eligible for an ad auction. This can happen multiple times a day.
Ta-da! You now have an Ad Rank. As you can see below, the red advertiser has the lowest Ad Rank and the green advertiser has the highest Ad Rank. This Ad Rank is not the position that you will receive, but it is helpful in seeing what you Ad Position will be.
Ad Rank and Ad Position are inversely correlated. The higher the Ad Rank, the better; the lower the Ad Position, the better.
As you can see, even though the red advertiser has the highest bid, it does NOT have the best Ad Position; in fact, it has the worst out of all four advertisers. The green advertiser, on the other hand, is paying less, with a MUCH better Ad Position.
If the red advertiser increased their Quality Score by improving their landing page experience, ad relevancy, or choosing a more relevant keyword to send to the page, they could have a better Ad Rank and Ad Position. In fact, they may even be able to bid less for a higher position!
While you cannot calculate your own Ad Rank relative to other advertisers, you are able to see your Ad Position and Quality Score. This will help you see if you need to either:
Increase the bid
Find or create a better landing page
Overall, it is important to understand that bidding a lot per keyword does NOT mean that you are going to have your advertisement on the top of a page. Other factors need to be in place, especially a relevant ad and great landing page experience.
Next Time on PPC Me Now
Now that you know about setting bids and the importance of a Quality Score, it is important to know how to create advertisements for those keywords. Next time on PPC Me Now, we will be discussing the components of a paid advertisement!
About The Author: Blue Corona is a data-driven online marketing company with offices in Gaithersburg, MD and Charlotte, N.C.
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