All you need to know about Google Quality Score:

Google needs to reconcile the interests of 3 main parties when they consider how to write their algorithms..

1. The Advertisers – Want to show relevant ads so users click on them…
2. The Users – Want to see relevant ads and don’t want to be bothered with spam or irrelevant materials
3. Google – want to ensure that both parties have a Great experience so that they come back to use the services again sometime in the future.

What is the Ad Auction and how does it work?

Before we talk specifically about Google Quality Score we need to understand how a simplified version of  the Ad Auction works. Here’s what happens: For our example lets assign names to 3 fictitious bidders… we’ll have Sue, Tom and John! In a simplified example the highest bidder will get the highest position but they will only pay just enough to beat out the next highest bidder. You can view your actual bid more like your “Your Maximum Bid”.

So Diagram 1 shows our three bidders and their ‘Maximum Bid”

Diagram 1 - Google Quality Score

But here in Diagram 2 you will see what they actually pay:

Diagram 2 - Google Quality Score

You see the highest bidder pays just enough to keep them in the top spot rather then their full bid price.

Alright, now that you understand how a very simplified Ad Auction works it’s now time to add the ‘Quality of the Ad’ into the Equation. Google knows that in order to maximize user experience they must take into account ‘Ad Quality’ and they do this with the Google Quality Score.

Google Quality Score

Google Quality Score has 3 main criteria or elements that are used to determine the quality of an ad.

1. CTR or Click Through Rate – This is the most significant factor in determining quality score. The higher the click through rate, the higher the score.  It allows the user to ‘Vote with Clicks’. Google values user feedback and this allows them to incorporate feedback into the overall score.
2. Relevancy – The second largest factor is how relevant the ad is to the keywords used and also to the search query. Google analyzes the language and context of the ad to determine how well it relates to a particular keyword. This ensures that only useful ads are displayed for the user and also ensures that an advertiser can’t ‘Buy’ there way into a search unrelated to the product or service they are selling.
3. Landing Page Quality – The final element in determining your overall google quality score is your landing page. This is the smallest part of the equation but can still change your QS considerably. The reason google considers this information is because your ad is only useful to the user if the page they land on after clicking your ad helps them find the information they are looking for. Your landing page needs to have Useful, Original content that is easy to navigate, has quick load times, a minimum or no pop ups and pop unders and is completely transparent about the business and how the site will interact with the users computer and how you, as a website owner,  intend on using the visitors information.

How does Quality Score Affect the way that the Ad auctions are run? …the answer is…..

AD RANK

Here is a simple equation that illustrates this:  Max Bid x Quality Score = Ad Rank! Google will multiply these 2 numbers together and the resulting number will give an overall Ad Rank and will ultimately determine where your ad will be placed. Let’s revisit our example from earlier.

Diagram 3 - Google Quality Score

In this Example Tom has the highest bid but because his quality score is so low his ad is actually placed last. For sake of argument lets assume there were only 2 spots available for the 1st page in google which is where the majority of traffic comes from. In this scenario Tom’s ad would not even show on the first page even though he has outbid the other advertisers. Now you can see why Quality Score is so important if you expect to be competitive using Google Adwords and PPC Marketing.

Diagram 4 - Google Quality Score

Now that we know how the ads are ranked the next question is:

How do you know how much you will actually pay for a click?

The answer, as in the very first simplified Ad Auction example, is you will PAY just enough to maintain your number 1 position. So John who is awarded the number 1 spot because his Ad Rank is the highest is competing directly with Sue who is now in the number 2 spot.

Here is the formula that is used.

P1Q1 = B2Q2

(P1 = Price to Pay | Q1 = Quality Score for Advertiser in Position 1(John) | B2 = Bid of Advertiser 2(Sue) | Q2 = Quality Score for Advertiser 2(Sue))

Or another way to view it is P1 = B2Q2/Q1 in words that means Position One’s cost is going to equal Bid 2 x Quality score 2 [which is actually the Ad Rank for position 2] divided by quality score 1 [ in the example quality score 1 = 8]

P1 = (3)(5) / 8 ….. so Position 1, John’s cost per click will equal $1.88! I hope this makes sense…

Diagram 5 - Google Quality Score

…of course you will never know what the number 2 person is actually bidding or what their quality score is so you won’t be able to figure this out yourself but it’s important to KNOW that your quality score can make a tremendous difference in your profitability and costs while running your Google Adwords Campaigns.

One last item to discuss…

What is the Value of Quality?

To illustrate this last point… what happens if Advertiser 1, John’s quality Score goes up to 10?

Diagram 6 - Google Quality Score

2 important things will happen first his ad rank will go up to 20… which in this example isn’t critical but it will be in the real world when their are many more advertisers you are competing with, and second his bid price just dropped down to $1.50.

So the end result is a higher Ad Rank and a lower cost per click.

To Summarize the importance of Google’s Quality Score System….

Google’s users win because they are served highly targeted and relevant ads, Google’s Advertisers win because they are able to show more relevant ads that are highly targeted and more likely to create business plus are rewarded for creating relevancy with lower costs per click and Google is happy because by providing a winning combination they are ensured users and advertisers will be back again in the future.

Quality Score is so important  and now you know how to model your campaigns to take advantage.. I can sum it up in one word RELEVANCY!!

The more Relevant you are.. The More Cheques you will Cash!

I hope you found this information helpful and useful. To hear Google’s Own Chief Economist go through this information in a video go to Introduction to the Google Ad Auction