Google Makes Changes to Ads Quality Calculation

AdWords advertisers whose ads are on the cusp of earning the top spot on Google's search results pages may soon find it easier to break through, in some circumstances. Google is planning on rolling out a change in the way it calculates the ad placement for a given keyword.

Currently, ads are scored based on their "Quality Score" and the actual cost-per-click (CPC) an advertiser pays as a result of auction pressure from other advertisers. This process, which was updated in February, calculates an ad's quality based on the historical performance of a given keyword, relevance of keyword to ad text, landing page quality, and other factors.

According to Nicholas Fox, group business product manager for ad quality at Google, the Quality Score will continue to be weighted more heavily in the calculation, but the change will come in the CPC Google uses in the formula. Instead of using the auction-driven CPC, Google will soon begin to use the advertiser's maximum bid CPC to determine which ad will be shown in the top spot.

The motivation behind this is to allow Google to consider more ads for the top spot, and at the same time be more restrictive in which ad will end up there. It will also give advertisers more control and predictability, he said.

The change will be most noticeable with ads on the cusp of the top spot, with the same or similar Quality Score as the top ad. It will especially impact ads on less competitive keywords that don't create enough auction pressure to drive the actual CPC up enough to allow the second-place ad to overtake the top spot. Advertisers will be charged the minimum CPC required to displace the top ad, up to their maximum bid, Fox said.

The change will not allow sites that Google determines to be of low quality to take the top spot, Fox said. "For some ads with a low Quality Score, there will be no level of bid that will allow them to get the top spot," he said.

Fox advises advertisers not to make changes until the changes roll out in the next few weeks, and they see what the effects are on their ads. He suggests advertisers make sure their bid reflects the maximum amount they are willing to pay, and that they keep an eye on the metrics in their AdWords interface. Once the effects are clear, advertisers can experiment with raising or lowering their bids, he said.

Think this will be a good or bad thing for advertisers? Frank Watson doesn't think so, as he writes that "Google's announced changes to the PPC cost calculations seem a little like a magic show and the expected audience is novice search advertisers."

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