Ad position is the position and the order in which your ad shows up on a page. A position of “1” means that your ad will be at the top of the page where it is more likely to get clicks. Your Ads can appear on the top of a page, on the side or at the bottom of a result page depending on the amount you have bid for.
When multiple advertisers choose the same keyword to trigger off their ads or they want their ads to appear to the same websites, Google uses its own way to handle these cases. It assigns rank to each of the ads which are called as Ad Rank. Ad Rank is used to determine Ad position of an advert on the result page. The process of ranking in Adwords is a bit complex and one needs full attention in understanding it.
An Ad Rank/Ad position is based on the combination of the amount you bid and Quality Score of Ads.
i. Quality Score
A Quality Score is an estimate of how relevant your ad is to the person seeing your ad. It is the amount of relevancy of your ads, keywords and landing page. Providing a great user experience will give you high Quality score. Having a high quality score means that your site’s ads, keywords, and landing page are applicable for your visitor. Getting a high quality score is very important and for this, you have to optimize your site and your ad campaign. Click through rate (a ratio of how often users click of your ad when they see it) is also a determinant of quality score. Quality score is determined by search engine algorithms.
Basically, Quality Score = Relevance (Keyword + Ad + URL) +User experience.
ii. Bidding Amount
When multiple advertisers want to use same keyword, bidding takes place. Just like a normal bidding, keywords are sold. Your bid will be your cost of click for your ads. It is the maximum amount that you are willing to pay for each click on your ad.
Ad Rank of an Ad = Max.CPC x Quality score
Ad Rank is measure by multiplying the maximum cost per click bid, an advertiser is willing to pay, to the Quality score of your score. Advertiser’s position on results page is determined by their ad ranks. The highest Ad Rank will obtain the top position and subsequently as the score decreases, the position of the ad slides down.
Advertiser 1 = 2$ x 10 = 20 (Ad Rank 1)
Advertiser 2 = 4$ x 4 = 16 (Ad Rank 2)
In a similar process, ad ranks are calculated.
The above example is for a single keyword that advertisers 1 and 2 are bidding. With this, you can know the importance of quality score. Even if advertiser 2 is willing to pay 4$ for a keyword, his ad is ranked in 2nd place because of poor quality score (4). Therefore it is very important to get a high quality score.
Actual CPC of an Ad
Maximum CPC is the maximum amount that you can pay for a keyword, whereas actual CPC is the amount that you will be actually paying for each click.
Actual CPC of an advertiser’s ad can be calculated by a simple formula:
Actual CPC = (Ad Rank of the competitor just below your ad/ Quality score of your ad) + $0.1 (Imagining that you are the advertiser)
So the actual CPC of advertiser 1 = 16/10 +0.01 = 1.61$ (less than the maximum amount that you have opted to pay 2 $)
Quality score is the most important factor in ranking of the pages and determining the actual cost per click. Quality Score is the good way to reach the desired top positions and reduce your costs. To become an Adwords star and to have a success with Adwords, you must improve your CTR, the relevance of your Ads, quality of your landing pages and the speed of the landing pages.
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