Feb 16, 2014

Your Quality Score Could Be Costing You. Big Time.

If you are advertising using Google’s AdWords (or pretty much any online advertising software) you may or may not be aware of what Quality Score is or why it matters. In a nutshell, Quality Score is a number between 1 and 10 and it is a key factor in determining the position of your ad and how much you will pay for a click (CPC) on your ad.

In a blog post in March of 2013 by WordStream’s founder and CTO Larry Kim, he details the estimated price difference for your CPC based on Quality Score. Within the article you will also find a graphic illustrating the breakdown of cost savings (or increases) by the different Quality Score values.

Improving your Quality Score by just 1 point could save you as much as 250% on your CPC.

So how is Quality Score Used?

Within an advertising campaign a list of words and phrases (keywords) is defined to determine what will trigger when an ad is shown. In addition to specifying your keyword list, you also specify the highest amount you are willing to pay (Maximum CPC) for a click on your ad.

When a search is executed in Google, an “ad auction” occurs in the background between all eligible advertisers who are “bidding” on the same keyword. The auction process determines where an ad will be displayed (Ad Rank). Another part of the auction process calculates how much a click on the ad will cost (Actual CPC).

Your Quality Score is used in both of these calculations, so having a high Quality Score can improve your ad’s position and how much you pay for a click.

How Quality Score Impacts Ad Rank

Although it sounds counter-intuitive, you can actually get a higher Ad Rank with a lower Max CPC, if you have a high Quality Score. The following example shows how this might happen:

Maximum CPC   x   Quality Score   =   Ad Rank

Ad Rank Calculation

How Quality Score Impacts Actual CPC

Once Ad Rank has been determined, your actual cost for a click is calculated. Here is the calculation for Actual CPC:

Ad Rank of Competitor Below You   /   Your Quality Score   =   Actual CPC

Here’s an example continuing with the data from the Ad Rank example:

Actual CPC Calculation

Actual CPC Calculation

Strategies for Improving Your Quality Score

As you can see, Quality Score plays a key role in where your ad appears and how much you pay when someone clicks on it. Improving your Quality Score involves three main tasks:

  • Improve click-through rate
  • Improve relevance of ads and keywords
  • Improve relevance of landing page

Click-through rate (CTR) is the ratio of clicks to views (or impressions) of your ads. The landing page is the page a searcher ends up on when they click a link on your ad.

Improving your Quality Score takes a lot of work, but in the end you’ll be glad you put in the effort and so will your wallet!

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