My neighbors recently sold their NYC apartment and moved down to Washington DC. Since we’re friends I was able to get the inside scoop on their sales process and I was surprised to learn they did not sell to the highest bid. You would assume when you’re selling your home that you would always pick the highest bid/offer, but that ignores another critical factor, which is financial health. In any transaction, especially large real estate deals, sellers must research the financial health of the potential buyer to ensure the deal will actually close. Otherwise, you risk accepting an offer that ultimately falls through.
The Google AdWords auction is quite similar in this regard. Again, since we’re talking about an action, you would assume the highest advertising bid will get the #1 ad slot in Google.com. However, that is not how it works! The bid alone ignores one of the most critical factors, which is called the Quality Score.
You can think of your quality score like your financial health when you’re looking to buy a home. If you have poor financial health, or a low credit score, then you could miss out on sales even if you offer the highest bid. On the flip side, if you have a bank full of cash and a perfect credit score, then you can actually get a discount by offering to buy a home in cash.
The same concept applies in the Google AdWords auction. It’s possible to bid lower than your competitors and still claim the #1 ad slot. In this article, I’ll show you how.
How the Google AdWords Auction Works
The Google AdWords auction is fairly simple. When a search is typed into Google.com, then AdWords finds all the advertisers targeting that particular keyword. Next, AdWords ranks all the advertisers by what’s called the AdWords Ad Rank.
Your Ad Rank is simply your bid multiplied by your Quality Score:
Ad Rank = Bid x Quality Score
If you have the highest Ad Rank, then your ad will be in the #1 ad slot. If your Ad Rank is too low, then you may not even show up on the first page of the Google results. Based on that simple equation you can see that the higher your Quality Score, the less you need to bid to obtain the same Ad Rank.
For example, if you bid $2 and your Quality Score is 5, then your Ad Rank is 10. If your Quality Score is 10, then you would only need to bid $1 to get the same Ad Rank and be in the same position in the Google results page.
Now you can see the power of a high Quality Score and how that can significantly cut the cost of your advertising!
Next, you’re probably wondering what exactly is the Quality Score and how can you get a high score?
How Google AdWords Calculates Your Quality Score
Unfortunately, Google does not reveal exactly how they calculate your Quality Score. Instead, they provide guidelines, and it’s up to advertisers like you and me to test changes in your account to see how they affect your scores.
Here’s what we do know based on what Google publishes. Your Quality Score is based on 3 key factors:
- Clickthrough rate (CTR) – This by far the #1 factor and it should be fairly obvious why. Google only makes money when people click on your ads so it’s in their best interest to reward advertisers that create ads that get lots of clicks. A high click through rate also indicates that the searcher likes/wants what you’re advertising.
- Ad relevance – How relevant is your ad to the search phrase? In other words, do you provide an answer/solution to what the searcher is looking for? The easiest way to ensure your ad is relevant is to include the keyword you’re targeting in your ad copy.
- Landing page experience – Does your landing page provide a good experience for the searcher after clicking on your ad? Page load speed, relevant content, easy navigation, and mobile responsiveness are all factors that Google looks at to score your overall landing page experience.
How to Check Your Quality Score
To check your Quality Score, navigate to the Keywords tab within your Google AdWords account. Then hover your mouse over the speech bubble in the Status column. From there you’ll see your keyword’s Quality Score as well as a rating of each of the 3 factors above on a scale of “below average,” “average,” and “above average.”
Want More Google AdWords Help?
On Thursday, September 24, 2015, at noon Eastern Time, I’m presenting a live training, How To Create A Profitable Google AdWords Campaign. During this training I’ll walk through step-by-step how to create a profitable Google AdWords campaign and how to avoid common costly mistakes.