Google’s New Ad Rank Algorithm and How it Will Affect Your Small Business
The topic of Google’s Ad Rank factors and specifically, how the Quality Score impacts the success of your Google AdWords campaign has been puzzling search engine marketers for quite some time now. Since Google updated the Ad Rank Algorithm at the end of 2013, there’s been quite a bit of confusion about this topic.
Google must have picked up on this debate and last week, they published their own official whitepaper titled “Settling the (Quality) Score” to assist marketers and advertisers understand how to use Quality Score to optimize their campaigns. The report is 10 pages long and I definitely recommend that you take a look at it, although I’m not quite sure if after you do, you will be very clear about what to do. So the debate will probably continue…
Among other points, Google explains that “Your Quality Score is like a warning light in a car’s engine that shows how healthy your ads and keywords are. It’s not meant to be detailed metric that should be the focus of account management.”
Instead, Google suggests to “Pay Attention to the “Big Three” Component Parts of Ads Quality. They are: ad relevance, expected CTR and landing page experience.” The reason why is because “The real-time evaluations of these three components are used in the ad auction, while your Quality Score itself is not,” explains Google.
Section 4 of the Report (on page 9) is titled “Six Things That Matter (and Don’t) When it Comes to Quality,” and it’s probably the most straight-forward explanation of some of the misconceptions about how Quality Score works. In particular, Google says that the User’s Device, “Does Matter”, however, Running Your Ads in Other Networks or Your Account Structure, “Does Not Matter.”
In conclusion, Google says that “Quality Score will give you insight into how you’re performing, but “chasing the number” shouldn’t be the focus of your optimizations. Be relevant, be compelling and drive traffic to landing pages that deliver on what you promise in your ad, and you can feel confident your score should reflect that quality.”
Google also has posted the video below that covers the AdWords auction and its many moving parts, including the key factors behind Ad Rank, how Ad Rank is calculated, and things to consider for maximizing Ad Rank.
Although the official announcement from Google with “More Insights about Quality Score and the AdWords Auction” may not be very clear or easy to understand for the average person, Phil Kowalski at WordStream (a company that MGR uses to manage and optimize our clients’ PPC campaigns) has written this simple article highlighting the “Top 5 New Things You Need to Know About Quality Score and Ad Rank.” Here are the five points that Phil highlights:
- Ad Format is more critical than ever: Back in October 2013, AdWords announced the “expected performance of ad extensions” would be factored into the Ad Rank formula. Back then, the impact of this metric was unclear and many PPCers believed it would serve as a tie-breaker of sorts. As it turns out, the performance of extensions (dubbed Ad Formats), is a more influential component of Ad Rank than we originally anticipated. in fact, AdWords’ recent video suggests that Ad Format is nearly as impactful as Quality Score. The bottom line is – utilize ad extensions whenever you can. They’re easy to set up, free of cost and apparently very critical to your Ad Rank!
- New keywords’ Quality Scores are impacted by existing keywords’ Quality Scores: Ever notice that new keywords are often assigned QS’s before they have even garnered impressions? Google finally admitted that new keywords’ initial scores are derived from the performance of “related keywords”. It is critical that agencies are aware of this when working with clients, whose accounts have a history of poor performance. Until they can turn around the CTRs/QS, new keywords suffer from low scores. In some situations, it may actually be wise to delete keywords with low Quality Scores to prevent them from impacting new keywords (if, and only if, these keywords are NOT bringing in conversions!).
- The user’s device does matter: Google recognizes that users’ behavior is different, depending on the device that they are using. For example, mobile CTR is typically significantly lower than desktop CTR. The good news is, Google understands this discrepancy and takes it into account when assessing performance metrics. That said, advertisers should do everything in their power to ensure that their ad structure/landing pages are catered toward the users’ situation. Be sure to follow mobile PPC best practices by creating mobile-preferred ads and directing smartphone users to mobile-optimized landing pages.
- Don’t obsess over Quality Score; it’s just a diagnostic tool: This is the overarching message behind the whole announcement. In fact, they downplayed the metric considerably, likening it to a “warning light in a car’s engine that shows how healthy your ads and keywords are.” They’ve gotten a lot of flak for this (check out Larry Kim’s rant), but I think the overall message is valuable. Advertisers who isolate their QS’s and make decisions based solely on this metric rarely see success. Instead, we recommend a more holistic approach. Use QS as a guide to determine where you need to shape your account. If you’re seeing low scores, it’s likely due to low CTRs, unenticing ads or irrelevant landing pages. Making improvements to these will almost always serve you well, even if you don’t see a huge raise in QS.
- AdWords renormalizes Quality Score regularly: I cheated a little on this one because I wanted to make sure you were all aware of this trend — while Google does not explicitly admit to this, our research supports it! Since Quality Scores are graded on a curve, 50% of advertisers should average 5′s or below. As advertisers are more cognizant of their scores and take efforts to improve them, inevitably the average score starts to increase. To get the average score back down to 5, Google periodically renormalizes QS’s across the board, resulting in an average QS decline for all advertisers. While this may be frustrating, remember that everyone’s scores are changing and they are still relative to one another. Therefore, you shouldn’t see any major impacts on performance.