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Ad Rank: What Everyone Ought To Know About The Jungle In Adwords

This is a guest post by Chris Thunder who likes to think of himself as an Alpha Advertiser in the AdWords jungle. He can help you become one too. Visit Tenscores.com, the Adwords Quality Score Tool he uses for cheaper traffic, follow him on twitter to be updated when he’s got some good stuff to share or read more of his concepts on the tenscores blog.
Elegant elephant representing alpha adwords advertiser

Alpha males have the highest Rank. Alpha advertisers have the highest Ad Rank.

Ever heard of the alpha male?

It’s a term used to describe the dominant male among  animals that live in groups. Usually the alpha male has special privileges like eating first, drinking first, being the first to mate or even the ONLY  one to mate.

Wikipedia refers the alpha male as being the animal with the highest  RANK.

What does this have to do with AdWords?

Well, remember how Google ranks ads on search results… Using a mesure called Ad Rank.

Ads with high Ad Rank take high positions while ads with lower Ad rank sink at the bottom.

But that’s just half the story and like social animals, Alpha Advertisers (advertisers with ads of high Ad Rank) get benefits that their competitors don’t. If you can increase your Ad Rank, Google will be generous in terms of traffic, position and cost.

Ad Rank Formula

You can do it.

The formula is very simple…

Ad Rank = MaxCPC  x Quality Score

… and very important to understand.

Anytime you change your bid (maxCPC), Ad Rank goes up or down. Every time your Quality Score (QS) changes, Ad Rank goes up or down.  Every time Ad Rank goes up or down, your ads get preferential treatment… or not.

Where To Find Your Ad Rank

Where to find ad rank

Sorry.

Well, you can’t find it. We know that Ad Rank exists but there’s no place in adwords where you can see exactly what ad rank each of your ad is receiving. However, it is possible for you to find out exactly what you’re missing out with a low Ad Rank using the Impression Share metric.

Impression Share is the percentage of the times your ads where shown out of the times they were eligible to be shown.  By customizing the columns in your Adwords account, at the campaign level, you can see how much impression share your ads have lost due to a lower Ad Rank. That’s one way to tell if you have great Ad Rank or not.

How To Get Higher Ad Rank And Dominate The Jungle

In order to have high Ad Rank, you need the ability to bid high and get high Quality Scores. It’s important to have both and it can be a challenge to obtain them. Although you can work your way up with high QS, it will be much easier and more profitable if you can afford bidding high as well.  Let’s get into more details…

Jungle Rule 1: Earn The Ability To Bid Higher

Yikes!

It’s all about your conversion rate. Every time you increase your conversion rate, you increase your ability to bid high. In fact, you should figure out the bid that yields maximum profitability for your business (yes, there is one) with every conversion rate you achieve.

How to have better conversion rates?

The offer. The copy. The design.

Those are my personal ingredients to high conversions…  in that order.

The offer is by far the most important component and it impacts everything else you do. To have the best offer, you need to know what your potential customers actually want. This is important and most people assume they know and fail to take the extra effort to “really” find out. If you’re interested in having a method to discovering what customers want, I always recommend The Perfection Of Marketing by James Connor, a book that I think every business owner/marketer should own.

Once you know what your prospects want, you need to know how to convey it with powerful copywriting. Spend time crafting a message that resonates  with your target market  in simple words.

Then comes the design. Crappy won’t do it (most of the times). Though some great copy writers can pull it off with crappy web design, you should leverage every tool at your disposal. A clear, clean and simple design wins. And by the way, simple and clear is usually better than beautiful.

Jungle Rule 2: Get The Highest Quality Scores

Yep!

Ah, that little number we love to hate loving over at Tenscores.com. Are you still wondering how to increase Quality Score? Can’t blame you. There seem to be a conspiracy around the web to put people on the wrong track at every turn.

I wonder who started it…

Here’s the ONLY  thing you need to know about QS and it’s not complicated:

If you have low QS… unless the diagnostic bubble tells you otherwise, Quality Score  EQUALS click-through rates. Nothing else.

Let me explain.

The diagnostic bubble is that little place besides keywords that give you some indication about why you have low scores. Take a look at the screenshot on the lower right.

adwords diagnostic tool

Adwords diagnostic tool

The “keyword relevance” part is key. What they really mean is keyword click-through-rate (CTR). So, unless that bubble tells you of landing page problems or load time problems, all you have to focus on is CTR. That’s it. The tricky part is, the CTR is not necessarily yours, it is sometimes other advertiser’s CTR. But even that is no big deal if you focus on increasing your own CTRs continuously (without sacrificing conversion rates of course).

So unless things change, as of today, November 2011, there’s no such thing as semantic relevance in calculations of quality score. And if there is any at all, it is small enough to simply dismiss it. Since the day I stopped worrying whether my landing page was relelvant or wether my ad had keywords in it and simply sharpened my ad-writing skills for higher CTRs, quality score has become the least of my challenges. All that Google cares about in regards to QS is CTR. Thanks to Craig Danuloff for confirming this in his book on quality: Quality Score  In High Resolution.  Anyone who wishes to disagree should read that book in its entirety first.

So please, will you give more attention to your Adwords ads CTR?! I beg you, for the sake of your business.

And here’s where the circle is closed: the best  way to get higher CTR is to figure out what searchers want and give it to them. Just like increasing conversions.

Once you can afford bidding high because your conversion rates and profit margins are so good and you understand quality score well enough to increase it, the snow ball starts to roll, your ads get more exposure, you get more traffic to your website, your costs are reduced and you become an Alpha Advertiser.

Don’t wait any longer… rule your jungle!

Opinions expressed in the article are those of the guest author and not necessarily bgTheory. If you would like to write for Certified Knowledge, please let us know.

8 Comments

  1. maxebiz
    November 30, 2011 at 12:16 pm · Reply

    Chris,

    Superb post! Great insight. I loved it.
    It’s really useful to share this level of experience.
    I think I might check out your AdWords Quality Score Tool

    Andrew

  2. Martin Roettgerding
    December 1, 2011 at 11:05 am · Reply

    Hey Chris,

    The part about quality score is actually a little more complicated. In order to rank ads in a profit maximizing way, Google needs to consider two things: How much does an advertiser bid per click and how likely is that click. Quality score is Google’s estimate of how likely that click is.

    It’s important to notice that Quality Score really is just an estimate. You cannot calculate a click-through probability, but you can try to get the best estimate as possible. One thing to look at is historical data: How did an ad and a query do in the past? How did similar elements do under similar circumstances? Real world data is certainly the most important contributor.

    But it’s not the only one. If there is simply no data available, Google has to look at other things. For example, does the ad contain the keyword? That is one clue. One of many. That’s one reason that quality score doesn’t equal CTR.

    It’s actually easy to demonstrate: An ad with no clicks yet has a CTR of zero. If quality score would equal CTR and therefore be zero, ad rank would be zero, too. The ad would probably never show, at least not for competitive terms. The system would break down 😉

    Another thing to keep in mind is that CTR has little meaning without context. The click-through probability estimate (aka Quality Score) is normalized for position. CTR on the other side greatly depends on position. If CTR would equal quality score, higher bids that lead to higher positions that lead to higher CTR’s would lead to higher quality scores, which is not the case.

    Ultimately, if you have a low Quality Score, it’s because your ad is not likely to attract many clicks, even when put on position 1. That’s what needs fixing.

    Martin

    • Chris
      December 8, 2011 at 3:10 pm · Reply

      Hi Martin,

      Great comment.

      The reason I say “Quality Score equals CTR” is to make it simple for people who are interested in getting results and remove the cloud of confusion that surrounds every discussion on QS.

      We can talk about what Google does behind the hood to assign each keyword with a QS, and I have read some of your great posts on the topic:
      http://bloosearch.com/2011/01/26/the-secret-of-quality-score/

      But…

      When I have a new client, who has horrible QS and if his conversion rates are decent, the only thing I will focus on is CTR. And in order to that, I will first try to understand his market, then reorganize his ad groups, then write new ads… all in order to increase his CTRs. What always happens is a surge in QS, an increase in traffic and a decrease in costs.

      So, simply for pragmatic reasons: Quality score = CTR

      🙂

      Chris

  3. Chris
    December 1, 2011 at 1:45 pm · Reply

    Thanks Andrew. Glad you liked the article. You’re welcome to try Tenscores anytime. Drop me a line if you do.

    Chris

  4. jameszol
    December 2, 2011 at 11:53 am · Reply

    You can drill down even more and find lost IS due to rank on ad groups in the dimmensions tab. And if you want to drill in even more, put a hot keyword into it’s own ad group and watch your IS spread on that single keyword via ad group IS stats on the dimmension tab.

    Generalizations like this are dangerous and send advertisers the wrong message in my opinion: “If you have low QS… unless the diagnostic bubble tells you otherwise, Quality Score EQUALS click-through rates. Nothing else.”

    I have seen plenty of cases where there is 100% CTR and quality scores sit at a steady 4/10 and the diagnostic bubbles are all clear.

    Also, each bubble seems to have one degree or another on the surface: Poor or No Problems. Just because the bubble says ‘No Problems’ does not mean there is not room to grow. It just means the most basic parameters have been met to reach a degree that is acceptable to Google. Evidence of this is in the landing page quality score updates earlier this year. I believe that was a hint at varying degrees of “No Problem” that can impact quality scores.

    I can see you were heavily influenced by Craig’s book which was a great book and every marketer should read it (I have read it 3x and am on my 4th), but it isn’t the gospel of quality scores as it is highly speculative (even Craig admits as much throughout the book) and it is constantly changing. Craig wrote that book before display urls became ‘unclickable’, landing pages had quality score, and more. Almost everything about QS is highly speculative. It’s good to speculate; dangerous to make broad sweeping generalizations.

    I believe linguistics and semantics are a part of QS but it probably represents a very small, maybe even insignifcant to most advertisers, part of the pie. Potential evidence of this is the alleged “near” match types coming out: near phrase and near exact. I’m hoping ‘near BMM’ comes out soon too. In this case, Google can tell what a person means (semantics) even if their query is misspelled or in a different order or otherwise. We also see semantics at play with query replacement that’s been going on for years.

    Semantics and linguistics can back into behavior and therefore CTR – but that is one of the many nuances one should know about when striving for a better CTR. You don’t need to only write better ad copy – you need to break up the audience, understand the people in that audience and use campaign settings and account organization to specifically target said audience. In that way, you can have multiple duplicates of keywords in different ad groups or campaigns in a single account and boost your QS in aggregate because of how you tightened up your audience segments based on the ads on that keyword that is attached to that audience.

    CTR is important, no doubt about it. It is only ~60% of the equation and I don’t think the bubbles adequately cover the other 40% at all because of the minimum threshold they represent – the “either/or” representation. In my opinion, they represent the minimum acceptable standard at Google and that threshold is going to be low to allow more competition but just high enough to filter out “the biggest bozos.”

    One can improve 100% of their QS through advanced audience segmentation, account or campaign organization and copy writing. It’s never as easy as “just boost CTR with better ads” because there are billions of permutations behind CTR given the billions of behaviors exhibited by every user x every query x every state the user is in upon querying Google.

  5. Chris
    December 8, 2011 at 3:13 pm · Reply

    Hi James,

    Thanks for weighing in. I agree with everything you say. Except for one:”broad generalization like this is dangerous”.

    I do make such a broad generalization precisely because QS is confusing and for people who want results, focusing on their CTR is the answer.

    I wish a few years ago when I was trying to fix my QS, wasting time changing landing page copy, putting keywords in every ad, etc some one had come along and told me “dude, just focus on your CTR”. Now, increasing CTR doesn’t just mean writing ads and it’s not what I’m suggesting.

    I agree with you when you say: “One can improve 100% of their QS through advanced audience segmentation, account or campaign organization and copy writing”.

    What I have learned is that when you sharpen your copy writing skills, you understand better how to organize campaigns, ad groups and segment your audience. Good copy writers spend most of their time researching their market and understanding who the person behind the keyword is. That translates into knowing how to segment their audience and having great account structure.

    In short, these are the two point I’m trying to make:

    1) There’s too much unnecessary noise on QS, the person who’s trying to get results should focus on his CTR, that’s the only thing that matters and the only thing they can control.

    2) Focusing on CTR means sharpening ad-copy-writing skill… which is, imo, the most important skill any advertiser can have. It permeates everything else you do, from keyword research to audience segmentation.

    Thanks for enriching the conversation. You comment is a blog post on it’s own. Awesome.

    Chris

    PS – I wouldn’t say I’ve been heavily influenced by Craig’s book, I read it only once and it only confirmed what i already knew. Most of it are things that we have no control over, it has great info but I wish he had written a chapter on ad writing.

  6. jameszol
    December 8, 2011 at 5:06 pm · Reply

    Chris,

    I shouldn’t have assumed you were heavily influenced by Craig’s book. I’m sorry for saying that.

    I agree that there is a lot of noise around QS. There’s a lot of good speculation and facts out there too.

    Best,

    James

  7. classdc
    December 14, 2011 at 9:24 pm · Reply

    Chris:

    I want to shed some light to disagree about CTR being everything — sure, with Google’s yield management algorithm in mind, yes — CTR must still be primary because they need to optimize their own profitability on click costs.

    However, LP quality now does make an impact BEYOND just meeting the “no penalty” threshold.

    The algorithm change to AdWords Quality Score on 10/3 this year made a visible impact on QS for many different accounts at our agency. We’ve particularly noticed a high QS delta % in certain keyword groupings that did not have, for lack of a better term, a “frequent presence” of that keyword on the landing page.

    It was almost an accidental discovery as I was using ACE (Adwords Campaign Experiments) to test landing pages, but instead of using 1 keyword to 2 ads (with different landing page URLs), I created experimental AD GROUPS — which means the same keyword and ad combinations were running against each other in experimental rotation.

    ACE results showed, to my dismay, no significant difference in the KPI I was measuring (conversion rate) — but interestingly I saw variance in position and CPC. Strange, I thought to myself — especially with brand keywords that are spending over $10,000/day and had low variance in an account we’ve gained historical QS over 5 years now.

    Well, when I compared the same keyword pairings, I noticed a pattern where I had QS improvements in the “new” experimental copy of the keyword, especially where in certain head brand terms.

    I looked at my control landing page vs. my experiment and when I did a simple search on those brand terms “CTRL+F” — I noticed my brand didn’t show up but once on my control (there were tons of logo pictures, but not in text).

    The new page had at least 10 text occurrences of my brand.

    This resulted in nearly 15-20% media efficiency in terms of targeting the same per unit media cost (CPC) at the same position.

    I wonder if others are seeing the same.

    Best,
    David Chung

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