Hand on heart, can you say you understand google adwords and how it works? I know I can’t. Well, I didn’t until I watched today’s video from the google business channel. Hal Varian from google explains it all in a very simple to understand way. It’s recommended viewing. You may even have heard about google’s quality score and wondered how this works too. All is revealed in the video.
Google’s motivation is relevance. Infact, I think it’s their mantra! There are 3 parties involved; the searcher, the advertiser and google. The searcher wants the most relevant content. The advertiser wants the searcher to click the ad and google want both to be satisfied so they will be back to advertise and click some more.
Adwords is an auction for clicks. Advertiser ads are shown on the right of the SERPs (Search Engine Results Page) and are ranked depending on the bid. The higher the bid, the higher on the page the ad will appear. However, the price the advertiser bids per click, is not what they pay. They actually pay the bid price of the advertiser below them (I didn’t know that). But there is another component to ad rank, and that is quality score.
Google’s definition of quality is based on relevance (er…no surprises there). The quality score google calculates for each ad is based on three components; the CTR (Click Thru Rate), the relevance of the keyword(s) to the ad copy and the landing page quality or relevance. The biggest component is CTR. This really is feedback from users. Does the ad grab the user’s attention and persuade him to click it? Is it relevant to what he is looking for? The second largest component is the relevance of the ad copy to what keywords the user typed in. The google bots will also examine the advert’s landing page and assess the relevance to the keywords and ad copy. The more relevant they all are, the higher the quality score.
So, how is ad rank actually calculated? The ad rank equals the maximum bid price times the quality score. The video shows some examples of how this works. The advertiser can influence the cost per click and ad rank by changing the quality score. As an advertiser, the better your quality score, the higher your ad ranks and the less you will pay per click. That’s a clever system. It rewards the smarter advertiser.
When you understand google adwords, you can make it work for you.
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