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.