PPC Costs Demystified


NuArtisan as one of Austin’s SEO, Social Media, and PPC experts is here to help you understand how Google PPC works. In the world of Google’s PPC advertising service, ad rank can mean everything to your company. After all, the better position you end up with, the higher the chance that you’ll get that click your company needs. Understanding how Google comes up with that ad rank, though, seems like a confusing nightmare to most people, and if you spend any time listening to folks who want to sell site access and ebooks, they’ll tell you it will take years to understand the formula. The bottom line, though, is that it’s a fairly simple concept.

Three Major Players

In Google’s PPC service, there are three major players to be concerned about: the advertiser (that’s you), the user, and Google. All of these folks have to work together for successful ads. After all, without the user, you and Google are sunk. Without Google, you and the user are out of luck. Without you, Google can’t make any money, and users can’t find the content they need. The ad rank takes all of these factors into account.

The Starting Line

Before you take a look at ad rank, it’s important to note that every time a query is made, Google auctions the clicks. You only pay for the clicks you actually get, and what’s more, you only pay the minimum amount necessary to beat the competition, not necessarily your maximum bid. Just because you’ve bid a certain amount, though, doesn’t mean that you’ll get the top slot. Google also factors in a quality ranking, and that’s what throws off many advertisers.

Quality Ads Mean More

Wondering why Google cares about quality instead of price? It’s simple really. The higher the overall quality of its service, the better chance they have of getting users to come back to them. In this case, quality encompasses three major factors: click through rate, relevancy, and landing page quality. Click through rate is a bit like a high school popularity contest. Relevancy analyzes how well your advertisement relates both to your keywords and the services you offer. This component helps keep advertisers out who are offering unrelated services. Landing page quality makes users happy. The ad is only useful if the page users land on helps them and is easy to navigate.

The Real Equation

So, here’s the tough mathematical part of all this – finding the actual ad rank. Ad rank is determined by your bid and the quality score of your page.
Your bid x Your quality score = Your ad rank

Price is a real concern to most too, though, so it’s important to discuss it. Remember, your price and your quality score have to be just enough to beat the other advertisers, and the price you pay is determined by the ad rank of the advertiser below your bid divided by your own quality score. The only time that doesn’t apply is when you’re bid is the last one, and then you pay the minimum price determined for that auction by Google.

This really is a good formula, though, because if your quality score shoots up through great landing pages and high quality, you actually get a higher ad rank for less money.
The bottom line – better quality = better scores = smaller marketing budget = happy CEO