What is Auction Quality Score, Ad Rank & its Calculations

 What is Auction Quality Score, Ad Rank & its Calculations

We are going to talk about the working of the Google Ad system or how Google Ads actually work. What is this PPC model? What is this auction based system, and how bidding works in Google ads and how the rankings of different parts in the search engine result pages takes place. So we'll be discussing these topics in this particular blog.

These are divided into five topics. 

1. Understanding PPC model
2. Understanding Ads Auction
3. How ads are ranked
4. Cost of ads
5. Deciding how much to pay for a click

• Understanding PPC model

So whenever you enter a keyword whenever you make a query in the search engine result pages, what you basically identify that Okay, there is an ad position number one, there is another ad at position number two, there is another ad position number three. So how these positions are basically defined, right? Why this position number three, ad is not showing that position number one, or why this position number two, ad is not showing that position number four, while they are defined in certain positions, right? What is their which actually defines their position, and then they are a result, then the result is basically shown over here, right? And they are shown over here. So this is what we are going to discuss in thethird point, which is how ads are right, and then the cost of ads.

• Understanding Ads Auction

Google Ads is powered by an auction bidding market.

Auction + Bidding

We have to understand the auction and bidding system are the auction and bidding process, what is this and how it actually works. So suppose if a user comes to Google, right, and let's make a page over here, this is the Google search page. And whenever a user comes to Google, and he or she makes a query, like buy online shoes, let's take another example over here, buy online shoes. As soon as the user is going to make the query, what will happen over here, there will be some results, right? There will be some results now identifying it very closely. Right now we are how many results we are going to see over here, right? Most of the time, we are seeing like four to five results. For results basically in the top four, top results. And maximum this this one is the maximum number of results that you can see at the top of the page, right this position this which is called as the top of the page. Then over here, what we see basically are all organic results.

These are the organic results. And at the bottom of this search engine result page, the maximum number of search ads that we can see are like three, this is the maximum number of search ads that we can see at the lower bottom, lower bottom portion of the search engine result page. So overall, we can only see seven ads at the first page position. Now, if we come to the advertiser side, right, so this one was the keyword right? Now, let's assume that they are like hundreds of hundreds of advertisers.

100 of advertisers are there. And those advertisers are bidding on the same keyword. Or we can say that in a simple language in a layman's language that they wanted to rank their ads on these keywords like buy online shoes, right. So this one is the keyword This one is the key word that they are focusing on all the 100 advertisers right? And now at the search engine result pages, what we are seeing over there are only seven results, right seven ads are showing over there. Now what happened to our 93 right, where are they? Where they their ad is gone. Right? They participated they wanted to give money to Google Ads also they wanted to give money to Google Ad system also, they were they were bidding they added their keywords in via their ad did not show over there in the search engine result pages which means that there is some confirm process which basically decides that what ads are going to pop up here in the search engine result pages. Now, in this particular blog, we will be talking about this process only there What is this process? Technically This process is called as auction and bidding system. Now what is auction auction is it's just like the offline auction where there is a product or service just just assume it as an auction marketplace right there is a product suppose this one is the pen and then there are this this is only the one pen right only pen we can assume it like this and then there are 10 buyers right and they are making their own bidding the first person is saying that okay, I wanted to buy this pen for rupees two. The other one is saying that okay, I wanted to buy it for five right. So, in this particular system, where the there are different buyers who are looking to buy this specific pen right. So, they are basically the advertisers in this particular scenario who are looking to buy a position right.

•  How ads are ranked

The example that I am taking is that there is a pen and then they are the buyers who are looking to buy this pen. Similarly, in the Google Ad system, there are advertisers who are looking to buy this position, right, this position for positions are there. So they wanted to buy this position. Okay, give me this position so that I can show my ad over here. Now, give me this position so that I can show my ad over here. So in the offline auction system, there was a pen, right? People are looking to buy this pen. And then there were buyers, in the same way with the same reference here in this online auction system, right? There are advertisers who are looking to buy this position, right. So this system of buying something is basically called an auction by putting some bids. Now bids are what bids are, like currency, you can say that the currency or the monetary values, the bits, right, right. So, let's assume a very basic example, let's not go to these high number of advertisers, let's only go to like there are 10 advertisers. Fine. There are 10 arises, let's say 1,2,3,4,5,6 or 7, let's assume seven advertisers over seven advertisers. Okay. There are seven advertisers. And now advertiser number one is saying that, okay, I'll, I'll basically I will put a bit of rupees one on if my ad pops up over here, if my ad is shown over here, and anyone is clicking on this ad, remember this thing if anyone is clicking on this ad, I am willing to pay a rupee one to Google Ad system. Now, this advertiser has said this to Google, okay. And how they are going to say this to Google, they are basically going to log into Google Ad system, they are going to make their campaign over there and over there, they will be deciding one key word like this buy online shoes and they will put a bid on this keyword which is like the bid is like for rupees one net that I have just mentioned over here. So for this specific keyword, the advertiser number one is saying that okay, if this keyword is triggering my ad, and it is showing over here in the search engine is that for any user is coming and clicking on that ad, what I can pay is rupees one. So, now this is the bidding right the advertiser one made are bidding of rupees one right in this process is called as auction why because it is not only about advertiser number one there are other advertisers also in the game, right then there are other advertisers also in this system. So it is as it is basically called an auction, which is very similar to the offline auction only. Now, this advertiser number two comes into play, and they are saying that Okay, I will pay rupee 1.5. Similarly, I'll pay rupees 2.0 right, rupees two rupees 1.5. And then there is an advertised number over who is saying I'll pay rupees 2.5. And then there is advertiser number five, who will say that okay, for the same keyword if my ads pops up, and any user coming on to my ad, clicking on my ad, I am willing to pay rupee for they got much money, right, they are saying that okay, I am able to pay rupee for now, then there is advertiser number six, who is saying, I will pay rupees 3, then there is advertiser number seven, who is saying I'll pay rupees, 2, right? So seeing this thing, this list of advertiser and their respective bidding amount over here, what what the conclusion is made that, okay, the, the advertiser number five will win the auction, we're here and his or her ad will be placed at this position number one, right, this position position number one, so they'll get the position number one, why because their bidding is higher. But this actually does not happen. Google is fair enough. Google says that okay, if you've got money, it's not only it's not everything right and you cannot buy the position in the Google search engine result pages with the money only Yes, money constitutes an important part money is there for the bidding section. But there are other factors also which are involved in the bidding. There are other factors also which are involved in bidding. So there might be the case where this advertiser number two, with its bidding, which is well as then advertisers number five bidding which is rupees four, right, rupee 1.5, as well as then rupee for HDL, this word advertiser can beat the advertiser number five and rank in the position above, then advertiser number five now how this will happen. This is how Google has designed their algorithm. This is how Google Ad Google Ad system is made that okay, if you get money if you are bidding higher, then there is no surety. Still there is no security that your art will be at position number one, no matter how much money you got.

No matter how much amount you are putting

in this bidding bidding section for any keyword right bidding section for any keywords, it is not the only deciding factor Yes, it plays an important role. The bidding element plays a very important role, but it is not the only element which is involved there, right?

So, summarizing all this thing, what happens over here is there are n number of advertisers and with respect to Google, these n number is super huge, right? For every keyword, there are 1000s and 1000s of advertisers, which are looking to show there are, so for each for each query, as soon as user comes on to Google search, right, they put their query over there, as soon as they are putting their query over there, what happens at the backend at the backend of this Google Ad system, there goes that complete auction process that happens the complete auction process, right. And, and the advertisers and the advertisers who are basically bidding or who are basically participating in this auction system are given some ranks, right are given some brands and, and whatever rank they got, they will be placed accordingly. Right. So this is how it actually works. And this is a very brief explanation of how this Google Ad system works. And as I said, it is actually powered by the auction bidding market.

• Quality score

Now let's make it very clear, right, and let's discuss something more about this. And let's again, talk about a very important factor, which actually comes into play, which is quality score. So as I told you that, okay, the bidding is not only the factor that is going to help you in winning position, right, then there is another thing, which is quality score, right, guys, there is another thing, which is quality score, so you have to maintain with respect to Google Ad system, you have to maintain your quality score. I'll be talking about this later about how we can maintain our quality score. But for now, you have to assume that there is another thing that is somewhere in your control, right, this quality score, which is a number given out of 10 to all these numbers are given out of 10. And you have to improve your quality score, which basically is if you come to quality score quality score is all about the relevancy, right? All about the user experience, their relevance on what keywords you are looking to rank, are those keywords there in your ad group are those keywords there in your ads are those keywords there in your landing page. So it's all about the relevancy? It's all about the user experience. It's all about your landing page quality. So if everything is good, if everything is relevant, definitely your quality score is going to be a good number. Right? So right now, what we are seeing over here, fine. What we are seeing over here is let's say there are four advertisers, which are participating in any auction. And let's say the bids the bids. Okay. And if we talk about the bits of the advertisers, the advertiser, PPC agency is saying that okay, I am willing to pay rupee for let's let's talk about rupees overheads dollars over here, we can ignore that when we can say rupee or whatever currency you want to say you can say that, right. So, right now, what PPC agency is saying that, okay, I wanted to show my ad on any keyword, and I am willing to pay $4, or the four rupees, and my quality score is five, right, they have a quality score, which is basically determined by Google, right? This is not determined by the advertiser. This is given by the Google by auditing your various various elements, which are like landing page, which is like your ad, which is like your key words, which is like your ad keyword and landing page relevancy, or all those things are relevant to each other, right? the keywords that you are bidding on the keyword that the user is searching, right, that keyword should be there in your ad groups, that keyword should be there in your landing page, that keyword should be there in your ads, right? So if the if that keyword is there, and there is any relevance between all these things, which means that you are going doing good, right, and you will, you will certainly have some good quality score along with the landing page experience, which is basically like your landing page speed, your landing page quality, how users are going to experience your landing page, how is basically the navigation of your landing page, right that that all thing determines the quality score, right. So the PPC agency is bidding for rupees four, with a quality score of five. Now their total ad rank is 20. So the formula is

ad rank = qs x m

I rank is basically a quality score multiplied by your bidding amount. So when I said when I said this auction system works on a very fair parameter decided by Google. So, it was not only about bidding, it was about quality score also and together quality score and bidding together formulates at rank, right. And this ad ranks the numbers that we are going to see over here, this ad rank is going to decide on what position you are about to rank. So now let's talk about the quality score, suppose the quality score of PPC agency was five and the quality score of PPC was five and their bid was four. So they made their ad rank to be 20 right. Now, if we assume if we assume the second of the first one, right, like we, we were bidding on repeat three, but our quality score was good, right our quality score was good, which was like rupee eight, which is like number eight, because this is not bidding. So it cannot be like rupees if it is just number eight into three which makes it as 24. So, now, we are basically ahead of this, this this advertiser, which was at position number two, which will basically occupy position number two later, because right now, I'm having a score of 24 which will make me at position number one or which will bring me at position number one and are competent our PPC agency was was giving was was willing to give basically, more amount of money is still because of their lower quality score, they cannot compete us and they they remained at position number two are they retain their sell themselves or they have to retain them sell for a position number two only similarly, if we talk about the third participant of this auction, if we assume this at as a complete auction and then there was the third advertiser who was bidding for rupees five, right their bidding was way higher, but because of their poor quality score, which will bring them to position number three, now, then there is a fourth advertiser also in the same auction and then they are saying that Okay, are we we got we got more amount we got more amount and we wanted to pay $6 or six rupees for each click Yeah, right. We are willing to pay when we say that maximum CPC bid, which means that they are willing to pay this amount it is not the amount that they that will be basically deducted it is not the actual amount that will be deducted if they are receiving the click you have to understand this thing. Very clearly. There are two terms which are like maximum CPC bid and actual CPC, CPC means cost per click. So when there is term maximum CPC, which means that the advertiser if the advertiser is saying that Okay, my maximum CPC bid is five, which means that they are willing to pay rupee phi or they are saying Google that okay, if I'm receiving any click, I am willing to pay rupees five. Right? This is basically the maximum CPC bid. But when we come back, and we talk about the actual CPC bid, it is something different. Actual CPC bid is actually how much amount is deducted during your click, or how much amount you actually paid to Google for a click that is actual CPC, and that has some different calculation maximum CPC is basically how much I'm willing to pay it is not the actual amount that I have to pay after the click or I am bounded to pay after the click it is not like that, it's just a willingness that we are telling, we are telling Google right so suppose if we talk about if we compare it this with the offline auction system, where this pen was the product that that someone was looking to sell, then there were buyers, and they were they were putting some bits right. So if anyone is putting a bid off rupee five, it is not decided, okay, that person is willing to pay rupee five. So there is an actual difference between the maximum CPC bid and the actual CPC bid. Now, if we talk about the maximum CPC bid, an actual CPC bid and their calculation, it is like the formula is given over here, the formula is given over here that how you are going to calculate right. So suppose in this particular case, I was bidding at three, this person was bidding at 4, this one was 5, 6, right? And we retained position 1,2,3 and 4 respectively. Because of the ad rank that we got, right? I got the maximum I brand because of my good quality score. So I'll be sitting at position number one, right I'll be having position number one in the search engine little pages. This one will have position number two, three and four respectively. Now, this one was the maximum CPC bid or the amount that we were basically willing to pay.

• Cost of ads

Now, how much is the actual amount we need to pay or we will be paying right. So, the calculation for actual CPC is written over here the formula is

Ad rank of ad below you / over quality score + 00.1

or quality score fine and plus 0.01 whatever the currency is this is the formula for calculation of actual CPC, which you again do not need to calculate it will be there by default, when you will see your report, but to make your basics strong, it is important that you must know how this actually works right. So, the ad rank of the person below you suppose, if I was bidding at maximum CPC bid, which was like 3 rupees or $3 then how much I am going to actually pay in this particular scenario. So, it is calculated by the ad rank of the ad below you. The rank of the ad below you is like 20 over quality score. My mind quality score was a plus 0.01 right. So, if we divide it it will come somewhere around 2.51

I mean dividing this it will be like 2.5 and then adding this it will be 2.51. So, in spite of my bed, which was at rupees three or which was somewhere around dollar three, I am actually not paying $3 right what I am paying is 2151 rupees or dollar whatever is you just have to manage with the currencies is not the big issue, the concept is the main issue, the actual amount that I will be paying will be like rupees 2.5 point one this concept. So, there are two terms right at the end of this video almost it's the end of this video. And we came to know so many things that there is basically an auction system. And the each advertiser who is looking to show their ad in the Google search engine result pages in the form of the search ad has to go through this auction system which is only and only not powered by money, many of the times we will believe that the higher number of amount you are going to pay to Google there are there are more chances are that your ad will appear at the first version, it's not like that, my dear, it's absolutely not like that, if you can maintain a good quality score, if you can maintain a good quality score of somewhere around rupees a, somewhere around number 8, 9, or even 10, I have seen quality scores of 10 which which are which which are basically there for for high relevant keywords or high relevancy things right when when when your ads, keywords, ad groups and your landing page, all these things are very much relevant to each other, you can have a quality score of 10 also fight That's crazy. And if you are having a quality score of 10, which means that you're there are high chances that you will be able to compete with other advertisers. And you will get a good impression on the search engine result pages during your art auction. And you will get maximum clicks also in that too with less spendings because your quality score was high. But it is all about the auction and the bidding and how there are different participants involved in this biddings ecosystem and how the rankings take place. Now let's talk a little bit more about quality score once again. And what is this quality score and how it is determined, right? How can we increase our quality score? Quality Score is basically the combination of two things.

 First one is relevancy.

Second one is user experience.

Right. And there are other factors also which are involved in the quality score. I am going to talk about that thing also. So the relevancy when we talk about relevancy, the relevancy of each keyword to its ad group, right. So when I was talking about the levels in Google ads, levels, which were like level zero,

which was an ad account, 

level one was campaign level.

Level two

level three was the actual ad level.

This is what we were discussing about fine. So when we talk about this level ad set, we have to put some keywords over here. So suppose a mind keyword is buy shoes online.

So if the person is searching this kind of keyword only buy shoes online. And this keyword is there in my ad group also. And this keyword is there in my ad as well as the ad copy that we are actually going to create this year.

It is in my ad copy also, and this keyword is there on my landing page also, which means that there is high relevancy, right? If and if there is high relevance, the relevance with respect to keyword, the relevancy with respect to ad and the relevance with respect to URL means landing page. If there is high relevance, there are high chances that I'm getting a good quality score. Right. So that is the second point, the relevance of each keyword to its ad group, landing page quality and relevancy. That is what I told you about the relevance of your ad text, your historical Google Ads account performance, how your account actually performed in the past. And then your click through rate by your click through rate is again, an important factor which contributes in your quality score or in deciding your quality score. Suppose if you want low CTR, what Google thinks that okay, this ad is ranking ranking on some irrelevant keyword, that is why people are not clicking on this ad it is it is not relevant to the user. That is why people are not clicking on this ad, that is why the Ctr is down. And if the Ctr is down, which means that the overall experience of the user is hampering. So, now, they will give less quality score to your to your keywords right to your keywords which will basically be a negative thing for you right and it will increase your bidding ifish still wanted to rank then it will increase your bidding amount because quality score into your multiplication to your bidding amount makes the ad rank. So if your quality score is low, then you have to increase your bidding to increase your ad rank. Otherwise, you will end up ranking nowhere fine. So there are so many factors which are involved in increasing your quality score. And if you can increase your quality score then it will be a good thing for you. And it will basically help you in spending less amount of money with respect to your bidding amount or the maximum CPC bid that you can enter over there in your Google Ads account. So that's it I believe you ought to know so much of things about a Google Ad system how it actually works, what is CTR what what is this auction What is this bidding and bidding is not the only thing that many people still consider that okay if we got a good amount of money we can still run it is not the only deciding factor there are the there are different things also that we have to take into consideration and one of one of the most important thing is quality scores that that actually can reduce the CPC that we are going to pay then there is difference between the maximum CPC and the actual CPC and then we talked about the different factors which are responsible for maintaining good quality score.

People also ask

• What is ad rank?

Ad rank for your search google that show searh engine result page that is called ad rank.

• What is google ad quality score

Quality score is a 1/10 ranking for your google ad keywords based on campaign organization & performance.

• How is advertising Quality Score calculated?

There are three type of factor quality score is calculate based on your

1. Expected click thought rate
2. Ad relevance
3. Landing page experience

• How does quality score impact campaigns?

Quality score is used along with your bid to determine ad rank. Higher quality score lead to lower costs.

• Should you optime for quality score?

yes,

1. High quality score (7+) repersent an orgsnized campaign performance.
2. Most importantly, higher quality scores also lead to lower costs.