Quality Score is important because it directly impacts your Ad Rank, whether your ad is eligible to be shown for a specific search query, and your actual Cost Per Click. In other words, Quality Score has a huge influence on not only when and where your ads are shown, but also how much you pay for the traffic.

Google is very open about how Quality Score is calculated. Although some factors are still proprietary, they tell us most of the inputs.

• The historical clickthrough rate (CTR) of the keyword and the matched ad on Google; note that CTR on the Google Network only ever impacts Quality Score on the Google Network – not on Google
• Your account history, which is measured by the CTR of all the ads and keywords in your account
• The historical CTR of the display URLs in the ad group
• The quality of your landing page
• The relevance of the keyword to the ads in its ad group
• The relevance of the keyword and the matched ad to the search query
• Your account’s performance in the geographical region where the ad will be shown

Quality Score directly influences how much you spend for a click. For each auction (an auction occurs for every search query), the ads all are assigned an Ad Rank. The Ad Rank is a product of the Max CPC Bid of the ad and the Quality Score.

Ad Rank = CPC Bid x Quality Score

The Ad Ranks are exactly what they sound: a number assigned to your ad that determines where your ad is ranked. This is how Quality Score fits into the equation of where your ad is positioned.

A better Quality Score also means that you will spend less for the same number of clicks. The Actual Cost Per Click that you pay is determined as follows:

Actual CPC = (Ad Rank to Beat / Quality Score) + $0.01

The easiest way to understand all the equations is to look at an example. Let’s assume that you are competing for an ad spot with one other competitor. You have dedicated a lot of time to improving your Quality Score, while they have ignored it.

Even though the competitor has a CPC bid higher than yours, the difference in Quality Score means your Ad Rank is higher and thus your ad is positioned higher. (Ad Rank = Max CPC x Quality Score) Also, the higher Quality Score means the ad costs less. If, for example, your Quality Score was only 9 the Actual CPC would be 16 / 9 + $0.01, or $1.79.

While many people forget about Quality Score, it really is an important metric to consider when optimizing paid search campaigns.

Some examples of these rich media ads can be found at: Gadget ad examples .

I am so excited about all the opportunities becoming available for online advertising.  These gadget ads are just another example of how Google continues to innovate and push the marketplace further along.

Case in point, I have been using www.keywordmax.com lately and I do love the new version they came out with a few weeks ago. You can now simultaneously manage multiple instances of the same keyword/match type across multiple campaigns! Before this release, what happened is that the first instance of the keyword that keyword max found was managed, the others being ignored. Not a very good situation if you are running 25 identical versions of the same keyword but differing in geotargeting (e.g. “keyword A” in kansas, “keyword A” in nebraska, etc…).

I have also found that having a good methodology and system for selecting what keywords to manage really helps as well. I have been using database technology and simple formulas based upon conversion rates, minimum impressions and overall competitiveness of the keyword to come up with my selection of keywords to manage using keyword max. I then run the query and save the results as a table, labeling as this month’s keyword max selections.

Give keywordmax a try and let me know what you find out! Its alot of work but will pay off with lower conversion costs and more effective spending of your advertising dollars!

I guess we can’t expect Google to programatically replace us search engine marketers just yet. I tried out the campaign optimizer on a few client campaigns and found out the following:

• It seemed to suggest raising the bids quite a bit of the time (imagine that!)
• The suggestions for optimizing the text ads were really weak – all I ever saw was a revising of the display url to show the ‘www’ subdomain (which i dont want to do anyway)
• The google optimizer did however have some good ideas for new keywords

Frankly, on first glance, a search engine marketer may have been worried, thinking that Google was going to eliminate our business by building an automated tool to do our PPC work. However, on first glance, it looks like it will be a while before you can replace your human search engine marketing analyst!

What are your thoughts on the new tool?

One could argue that there are three main PPC players right now: Google, Yahoo and MSN. Ask.com has a smaller market share, around 7% (Comscore 2006) while Google commands around 50% of all the searches. 2nd tier search engines, like Kanoodle, Dogpile and Mamma, niche business search engines like Business.com, or even PPC networks such as Quigo, give us as search marketers many options for our paid search advertising.

However, along with all these options come challenges:

• Data Management and Integration – how do you capture and act on all this data?
• Targeting Options – Google offers geotargeting, time and day parting, with Yahoo hot on their heels with a similar set of options in their upcoming fall 2006 release. MSN even offers lifestyle targeting and demographic data on their searcher data. How do you properly configure these parameters?
• Competition – How do you see what your competitors are doing? How much they are bidding?

PPC Optimization Levers

Short vs. Long Term Optimization Levers
Short Term – Done every couple days – examples: adjust CPC bids, monitor/adjust coverage monitor 3rd party PPC tool settings, adjusting budget to adjust coverage
Long Term – This takes more planning and analysis – biweekly or monthly – examples: new text ad creative/offers, study/adapt to competitor ads/creative ideas, adding new keywords, changing overall bidding strategy

Campaign Structure

Having a well organized PPC campaign can help you in several ways:

• Easier to manage your budgets, targeting and ad positioning settings (Google, MSN)
• Allows you to quickly see what is going on with your PPC campaigns at the campaign level, before you jump in and get lost right away at a more granular level
• Organized campaigns lead to better organized ad groups/categories and thus more relevant keywords and higher response rates