Optimize for Quality Score and Pay 400% Less Than the Competition
In today’s screen cast on managing and optimizing your AdWords account I address something that has eluded most optimizers for quite some time. I break down the theory of how to utilize quality score in the ongoing battle for cheaper AdWords clicks.
There are two very important images that highlight two important concepts inside AdWords.
The first image demonstrates an important (and often overlooked) piece of the AdWords Management game. There is a direct correlation between quality score optimization and bid optimization. By focusing on quality score optimization as well as ecommerce/ROI optimization, you can maximize clicks and cost.
The next image documents the exact same period of time with one of our clients. You’ll notice the direct positive correlation between CTR and Quality Score. I’ll explain in the video why Google associated a high CTR with relevancy.
Understanding how click thru rate, cost per click, and quality score are related will help you know what areas to focus on in your account to lower your cost per click, and cost per conversion (CPA). Screenflow and Video below.
Video Transcript:
Hi it’s Mike from Search Scientists and today we’re going to be learning about the connection between CTR and CPC. And how to use that information to get cheaper clicks on AdWords. Subtitle: Pay 400% less than the competition and appear above them in the AdWords results.
Basic Vocabulary:
CTR stands for click through rate. Put clicks over impressions and times it by 100 to calculate CTR.
CPC: Cost Per Click. We’ll talk about what it means later.
Quality Score: This metric is extremely important. It’s a relevancy metric that Google uses to help rank where your ads show up. So if you want a high quality score, you want to make sure that your ads, keywords, search queries, landing page, landing page practices are all very relevant towards what people are looking for.
Calculating CPC:
Here’s a little image to help understand what quality score is. CPC is the calculation of:
Taking the competitor below your position’s ad rank, divided by your own quality score, plus one penny. Ad Rank is quality score time bid.
Adwords is an auction, but it’s not just bid based. There is a quality score infusion for you to be aware of.
Let’s take a look at how this calculation comes into play with a real example. On the left side, we can bid 75 cents, we have a great quality score of 9. Our ad rank would be 6.75. Let’s look at our competition. They’re paying much more than us. They’re paying 400% more at a 3 dollar CPC. They have a poor quality score of 2. So using the calculation for ad rank, they have an ad rank of 6. Dividing their ad rank over our quality score, plus one penny means we’d pay 67 cents AND appear above our much higher bid from our competition.
Now I haven’t mentioned CTR just yet. Where does CTR come into play? It’s important to remember Google’s objective for AdWords. AdWords is a huge business, and Google wants to genuinely provide great results for people that click on their adwords ads. So if you create a piece of ad copy for a keyword that gets a very high click through rate than your similar position competition, you’ll be rewarded a higher quality score. As a rule of thumb, the highest CTR on the page gets the best quality score. You can actually check your competition’s CTR. Go to opportunities, analyze competition. Here we are in blue, our CTR 12.5. We can also see the average of our competition. Again the relationship between CPC and CTR is very relevant. This is from a client account who sells golf balls.
You can see the CTR had a huge increase, and it resulted in a lower CPC. We lowered our CPC by 25%. The intermediate between these numbers, is quality score. During this time, we increased quality score and thus lowered CPC.
So if you’re looking for more practical AdWords strategy and advice, feel free to contact us at search scientists dot com.
