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Thursday, October 16, 2008

Understanding the AdWords Quality Score

A new post on the Google Blog today talks about the quality score and ad auctions. If you use AdWords read it, it's worth the time. In my opinion the most important paragraph in the post is this one:

"What matters in this decision is not simply an advertiser's value for a single click -– the maximum CPC that the advertiser is willing to pay -- but rather the total estimated value of showing that ad: the value per click times the number of clicks that the ad is likely to receive."

Translation;

AdWords Quality Score = Google Revenue Potential
High AdWords Quality Score = High Google Revenue Potential
Low AdWords Quality Score = Low Google Revenue Potential

I spend a lot of time in forums and other areas where AdWords users congregate and without fail the most common question (and biggest source of frustration) is the AdWords quality score. Advertisers just can't understand why they are getting a poor quality score because in their eyes their campaign/ad group/keyword/landing page is "completely relevant" and should have a perfect 10/10 quality score.

Once you understand that in terms of it's ad network Google's yield management practices are what drives the quality score it becomes a little easier, at least from a conceptual level, to improve your quality score. Yield management, from an ad serving point of view, means extracting the maximum amount of revenue from a fixed quantity of perishable goods and/or services (ad impressions).

Simply stated that just means Google wants to make the maximum amount of ad revenue from every single ad impression generated within their ad network. If you want to improve your quality score demonstrate to the quality score (yield management) algorithm that your ad stands to make more money for Google than other ads in the same auction and you will receive a better quality score.

Typically when I reach this point in the conversation with people a common response to the above is something along the lines of I'll raise my bids so I'm in a higher position and that should improve my CTR. A higher bid + a better CTR should give Google what they want and should help me raise my quality score.

Unfortunately that approach doesn't work and often just ends up frustrating the advertiser when they see all the extra money they are spending but are not seeing an improvement to their quality score. In relation to determining your quality score, Google normalizes CTR by ad position. That just means that Google knows higher positions get higher click through rates and that's taken into account when determining your quality score. When an advertiser increases their bid to get a higher position and improve their CTR all they've really done is moved a poor performing ad into a higher position on the page. They won't see an improvement in their quality score and will likely just end up drastically increasing their actual CPC without any quality score related benefits.

The best way to improve your quality score, both short and long term, is to work on improving your CTR. CTR is huge part of the quality score and can be influenced by advertisers rapidly with great ads / ad groups. Check out the following for more info about CTR and improving CTR:

- AdWords Tips
- How to Improve Your AdWords Quality Score (nice section on improving CTR)
- Q&A - What is a goof Click Through Rate?
- 31 Killer AdWords Ads Tips

If you have tips or suggestions on how to improve AdWords CTR's comment away!


5 Comments:

At 12:53 AM, Blogger david said...

Great post Jeremy!

I tell this to people all the time - Google's yield management system is based on the effective CPM Google achieves from your ad - CTR X Max CPC = CPM.

Quality Score - as you note - simply tries to assess the likelihood that a particular auction participant will achieve a high effective CPM.

BTW, I'm writing about this very topic in the next print issue of Search Marketing Standard.

Personal note: drop me an email Jeremy - want to see what you are up to!

 
At 5:02 AM, Blogger CustardMite said...

Hi Jeremy,

Google could probably argue that what they are trying to do is to put the adverts that their traffic want to click on in a high position, which benefits their users.

The fact that this makes them the most money is just a happy coincidence (!?)

I would argue that for a good PPC Agency, the QS allows you to gain an advantage over less knowledgeable competitors, so it works to our advantage as well.

The only real losers from the system are the people who don't understand how to optimise their campaigns - if everybody had a Quality Score of 10/10, it would have no bearing on anyone's advert position.

I like the Quality Score - it works in favour of Google, their users, and most of their advertisers...

 
At 8:33 AM, Blogger Jeremy Mayes said...

CM,

Not only could Google argue that what they are trying to do is to put the ads that their traffic want to click on in a high position to benefit their users, that is exactly the argument they make. I don't disagree with that assessment at all.

The purpose of this post was just to try and explain the QS in the simplest way possible. I've seen time and time again that after people stop thinking about the quality score as some top secret black box and realize what it's main goal is they have an easier time working within the AdWords platform.

I'm a fan of the quality score as well - in my opinion it helps reward better ads which are typically written by better advertisers.

David - Looking forward to your SMS article. You always produce top notch stuff.

 
At 1:05 PM, Anonymous SF Greg said...

Hi Jeremmy,

Have you ever seen QScore jump dramatically because of a change you made?

Greg

 
At 2:29 PM, Blogger Jeremy Mayes said...

SF Greg -

Since G' started showing the QS on a 1 - 10 scale I've seen QS's go from poor scores to great scores multiple times. While I've made multiple changes in those cases the driving factor in the increased QS has been CTR.

 

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