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As a Search Engine Marketer, one of the questions that I get asked most by clients is “What determines my position in Google search results?”
It is a popular point of confusion — clients have a separate SEO team establishing the importance of using keywords on their website in order to gain visibility in search results while their SEM team touts the ability to use marketing budgets to force Google to place their advertisement in search results on important keyword searches. While SEO (search engine optimization) is a merit-based system of ranking, SEM (pay-per-click) is an auction-based system that allows advertisers to gain visibility based on keyword-specific bids. Let me explain!
PPC results, as we all know, appear at the top and right side of Google search results. There are ten available positions on each search result page (normally three at the top and seven on the side). On the surface, Google uses a simple formula to determine how these results stack up against each other.
PPC ads are ranked using this formula:
Ad rank = keyword bid ($) x quality score
Keyword bid (or CPC bid) is the maximum dollar amount that you are willing to pay for each click on your ad for that specific keyword (“car insurance”, in this instance). Quality score is a Google metric that determines how relevant and useful your ad is to the search engine user. The higher your quality score, the better. Google actually assigns a quality score for each keyword that you wish to advertise for (1-10 scale).
Quality score measures “relevancy” by looking at two things: your PPC advertisement and the page to which you are directing traffic after the click (the “landing page”). Both must be directly related to the keyword on which you have placed a bid, or else Google will assign you a poor quality score.
For example, if your PPC campaign contains insurance related keywords Google will:
- Review your ad copy to be sure that you are promoting insurance-related information, and
- Evaluate your landing page to be sure that visitors are being directed to an insurance-related site
What happens if you have a poor quality score? Good question. In most instances, this poor quality score will be reflected in a higher required cost per click or in a lower ad rank (if you do not compensate by increasing your keyword bid). In other examples of ads that are not remotely relevant to their associated keywords, Google will simply not show the ad in search results in an effort to improve their user experience. Remember, Google’s ultimate goal is to provide the exact information that it believes its user is looking for.
Google will determine your specific click cost on a keyword-by-keyword basis, using the formula above. But remember this when wondering how your cost per click is calculated in Google: just because you have bid $4.00 per click for a particular keyword doesn’t mean that you will pay that much. It is the maximum that you will pay for that keyword. All things being equal, the advertiser will pay will pay the minimum amount for their ad’s position as possible. If the quality score is the same for two advertisers competing for the same keyword, the high bidder will pay only $0.01 more per click than the next highest bidder and be placed one rank higher in search results. Confused? Don’t be. Let’s look at an example:
Advertiser 1 has a maximum keyword bid of $10.00 for the term “boise auto insurance”, more than any other competitor. They have a quality score of 8/10. Advertiser 2 has a maximum keyword bid of $8.00 for the same keyword, with a quality score of 8/10. They are the second highest bidder. Advertiser 1 will be in position 1 in search results, with a cost per click of $8.01.
You won’t always pay a per-click cost equal to your maximum bid, which is pretty cool! You can further improve your cost efficiency by doing things to raise your quality score, but that’s a different blog post for a different day.
There you have it – a quick explanation of how Google determines your position and cost in Paid Search results.
