Dallas Business Consultant Elijah ClarkDallas Business Consultant Elijah Clark

Cost Per Click

Google’s Ad Rank program is designed to help you display the most relevant ad content to your customers and to provide an equal system that benefits both the customer and your business. The Ad Rank system is controlled by your ad quality, which is determined by the websites click through rate (CTR) and ad relevance to landing page content and keywords used. Ad Rank works by helping customers gain satisfaction through seeing more relevant ads to their keyword, and you get to show more relevant ads for your product or service so that you attract the right customer group. The result is that your business gains satisfied and relevant customers. Additionally, Ad Rank is used to determine where (and if) your ads appear and how much you pay each time a user clicks on your ad. The ranking system is created using a mathematical formula that decides which ads appear within the top positions of Google’s AdWords.

A cost-per-click (CPC) is the amount you choose or agree to pay each time a potential customer clicks on your Google ad in AdWords. A Quality Score is a numerical estimate based on the overall combined quality of your ads, keywords, and landing pages. The formula used to create your Ad Rank is: Ad Rank = Max CPC x Quality Score.

Example Case Study. Mike’s Biscuits (MB) has a current quality score of 3 for the keyword “Dog Biscuits.” To find the Ad Rank position, MB can calculate the Max CPC ($4) by the Quality Score (3), and the result equals 12. If MB raises its quality score to at least a 7, the company could easily lower its CPC to $2 and end with an overall rank of 14. With a higher quality score, MB can pay half the cost and rank higher than with its lower quality score of 3 and budget of $4. To raise its Ad Rank position, MB should focus on raising its quality score by increasing its click-through-rate (CTR), keyword relevancy to users’ search query’s, and by creating an optimized landing page that holds original relevant content. The higher the quality score, the lower the CPC. Ultimately, the Google quality score system allows for the prevention of advertisers to pay their way to the top of the search results within Google’s search engine. With this system, the higher quality score will save the advertiser money, create better placement, and increase the business’s revenue.

Google Ad – A/B testing

Most people who do A/B testing are never truly giving their testing ad a full chance at achieving its best possible results. Furthermore, without testing the ad properly, these individuals or companies may ultimately lose money, time and potentially reject a successful ad that just never had the chance to prove itself successful due to the lack of owner knowledge.

In addition to the explanation of failed ads, Thies goes further into his article and explains the process of creating a successful ad testingcampaign. The technique he uses explains that by keeping the control ad running throughout the testing of the new ad, the user can save money and also “eliminate performance history as a variable (Thies, 2008)” in the test ad. By creating multiple copies of the control ad, the user can “avoid giving 50% of impressions to an unproven ad which may fail (Thies, 2008).”

Creating multiple copies of the control ad, the user does not lose as much profit due to the control ad always running. Instead of the user losing 50% of ad impressions to the testing ad, that percentage shrinks to 20% because of the additional control ad copies.

In addition to this type of testing saving profits and potentially accelerating the testing process, it also allows for the user to create a valid testing environment by “comparing the performance of the test ad against the copies of the control only (Thies, 2008).”

Credits

Thies, D. (2008). Split testing adwords: you’re doing it wrong. Retrieved June 12, 2010, from http://www.seofaststart.com/blog/split-testing-adwords-youre-doing-it-wrong

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