How Google Ranks Ads for Adwords

An understanding of the way Google Adwords ranks PPC or paid search ads is vital if you wish to establish a profitable paid search strategy. Here is an overview on how Google ranks paid search listings:

Every time your ad is triggered by a key word/phrase, Google calculates the Ad Rank of each paid search listing. Listings with the highest Ad Rank are shown first and listings with the lowest Ad Rank are shown in the lowest positions or even not at all.

Ad Rank is determined by the following equation:

Ad Rank = 'Maximum Cost Per Click' x 'Quality Score'

As you can see, Quality Score plays as important a role as bid price does in determining
where your ad ranks.

This means a competitor who has a better quality score than yourself can actually rank above you for a lower cost per click (CPC).

It is your goal to achieve the highest possible position for the lowest possible cost.

Taking the Ad Rank equation into consideration, it becomes easy to see how a strong Quality Score can result in higher rankings at a lower price. How do you secure these higher listings at lower bid prices?

First, you should understand what Quality Score is and how you can increase yours.

Quality Score

Unfortunately, the way in which Google calculates your Quality Score is unknown.

However, Google does tell us many of the factors that determine Quality Score;

1 - A keyword's click through rate (CTR)
2 - The historical performance of that keyword
3 - The relevance of text in your ad
4 - The relevance of the keyword to its ad group
5 - The quality of your landing page
6 - Other, unknown relevancy factors.

Now that you know the fundamentals of how Google Adwords works, the question becomes; how to leverage the competitive PPC (Pay per Click) arena in your favour?

Optimising Your Google Adwords Account

In recent times the competition for broad key terms such as 'shoes', has sky-rocketed. This has resulted in higher cost per clicks for such terms.

A simple, yet effective technique is to target more specific key words, such as 'tennis shoes' or 'buy platform shoes.' The competition for these types of phrases is less aggressive, leaving you able to capture a large amount of traffic for a substantially lower cost-per-click.

This is known as targeting the long tail of search. While the key terms that fall into the 'long tail' are searched for less often than those broader more generic key terms, there are far more specific keywords than there are broad key terms.

That makes it possible to leverage the long tail to receive as much or even more traffic for substantially less money.

On top of the benefits above, concentrating on the long tail key words enables you to target your market more specifically. The result is often an increase in quality score, and a much stronger return on investment (ROI).

Achieving a Better Quality Score

If you have multiple products or services, it is possible to group them separately into categorical groups and make each ad group's ad text and landing page specific to each product or service.

By creating ad text that better matches a user's search query, it is possible to significantly increase an ads click-thru-rate. Moreover, by creating tailored landing pages specific to the product or products the user is searching for, it is possible to increase the number of conversions.

The benefits described above all contribute to a better quality score.

Because of this ranking algorithm it is possible for advertisers with a good click through rate to achieve a higher position for a lower CPC than their competition. This is why long tail related ads often appear higher in the Google results than general keywords, despite the fact that those advertisers are paying less per click.

Summary

Optimising a Pay per Click (PPC) account to achieve optimal results can be a very complex process. Firstly you will need to build out enough ads and keywords to target the long tail. This will involve a lot of keyword research. You will need to take into account category and product keywords, localization, common spelling mistakes, call to action keywords and so on.

Second, to make the most of those long tail keywords an advertiser will need to have very specific ad text. When dealing with hundreds of products it is tricky to generate a unique text ad and landing page for each one. Nonetheless, this is essential to maintaining a good CTR. PPC management companies will often have their own in-house tools to achieve this.

Testing ad text variations and testing landing pages are also important steps in achieving the most from your advertising spend.

However the most important step is measuring and managing the ROI on each keyword. Since the PPC arena is constantly changing, constant monitoring is essential. The value of every keyword is also constantly changing therefore it is essential that you work on a keyword management strategy to deal with this. Bid management tools can be especially helpful here, as can a third party PPC Management Company.