| Google Adwords is an auction based Pay Per Click | | | | higher clickthrough rate (CTR). This tells Google that |
| (PPC) advertising system where you as a PPC | | | | users are finding the ad relevant and clicking on it to |
| advertiser set the maximum amount you are happy to | | | | find out more. A higher CTR will increase a keyword's |
| pay for each click you receive from your | | | | Quality Score which in turn increases the Ad Rank. As |
| advertisement placed with Google. | | | | a PPC advertiser this means that you can maintain or |
| As an Adwords advertiser you compete in a real-time | | | | increase your position whilst lowering the actual cost |
| auction every time a keyword triggers your ad. | | | | per click that you pay. |
| Adwords is a 'Vickery' type auction. In a Vickery | | | | Furthermore Google stops displaying ads for |
| auction once a winner has been decided, the actual | | | | keywords that have a low Quality Score. If an ad has |
| price paid is not the maximum amount bid, it is one | | | | a low Quality Score on a certain keyword it means |
| penny more than the bid of the second highest bidder. | | | | that users are not finding that ad relevant to their |
| Google Adwords adds a twist to this, as winning | | | | needs and Google will disable the keyword by making |
| bidders are also determined by Ad Rank not by | | | | it inactive. |
| maximum bid. | | | | <b>A Practical Example Of How The Google |
| NeverPay For Per Pay Click Advertising again | | | | Quality Score Works</b> |
| because Adwords Exposed | | | | The PPC bidding system that Google Adwords |
| An understanding of the way that Google Adwords | | | | operates is a complicated one because we can never |
| ranks PPC bidders to determine who has won each | | | | fully be sure of the Quality Score of competitive bids. |
| of the real-time auctions is essential to establishing a | | | | Making assumptions about the Google Quality Score, |
| consistent and profitable strategy when taking part in | | | | here is an example of how the Google Adwords |
| the Google Adwords PPC Programme. | | | | system would decide who wins a PPC auction and |
| <strong>The Google Adwords Quality Score< | | | | how much they would pay per click. |
| strong> | | | | I've used 3 PPC bidders to display how it works but in |
| The Google Adwords system for determining who | | | | reality there will be many, many more bidders involved |
| wins the PPC auction is based upon the belief that high | | | | in each PPC auction. |
| quality ad creatives benefit all parties involved. When | | | | The row titled 'Actual CPC' below shows how much |
| the ads that Google displays match the requirments of | | | | each Adwords bidder would pay for their click |
| searchers the assertion is that this benefits advertisers, | | | | following that particular auction. |
| searchers, publishers and Google alike. They name this | | | | <b>Noddy</b> |
| 'relevancy'. | | | | Quality Score= 3 |
| Since the winning bidder gets the highest position and | | | | Maximum CPC= £0.55 |
| the highest position gets the most clicks, the goal for | | | | Ad Rank= 1.7 |
| you as a Google advertiser is to get the highest | | | | Actual CPC= £0.34 |
| position for your advert creative at the lowest possible | | | | <b>Big Ears</b> |
| cost per click (CPC). | | | | Quality Score= 1 |
| Every time a search is prompted and an auction has | | | | Maximum CPC= £1.00 |
| taken place, Google ranks the triggered ads by 'Ad | | | | Ad Rank= 1.0 |
| Rank'. The position of each ad is based upon its 'Ad | | | | Actual CPC= £0.84 |
| Rank' | | | | <b>PC Plod</b> |
| Ad Rank = 'Maximum Cost Per Click' x 'Quality Score' | | | | Quality Score= 1 |
| Since the 'Ad Rank' is not just the maximum amount | | | | Maximum CPC= £0.80 |
| that an advertiser has bid the highest bidder does not | | | | Ad Rank= 0.8 |
| always win. The winning bid is based upon an additional | | | | Actual CPC= £0.41 |
| set of elements, which together make up the Google | | | | |
| Quality Score | | | | To calculate how much each bidder pays, Google first |
| <strong>The Google Quality Score & Cost | | | | calculates the Ad Rank for each PPC bidder. The Ad |
| Per Click (CPC)</strong> | | | | Rank is Google's Quality Score multiplied by the |
| Typically the higher an ad's Quality Score, the more | | | | Maximum CPC. Above we've ranked the ads by their |
| relevant it is for the keywords to which it is tied to. | | | | Ad Rank and we can see that Noddy has won this |
| When ads are highly relevant to the searcher they | | | | PPC auction and his ad will be in top position in the |
| tend to earn more clicks and as a result achieve a | | | | search engine results. |