Franklin, a regular reader of this blog, emailed me a great question regarding Adwords Quality Score:
“What I was wondering is this: assuming all else have been done very well (tightly grouped ad groups, relevant keywords with ad copy, with landing page, etc etc), is it possible to get a “Great” quality score from the beginning ( i.e: literally right after we launch our campaigns)? Or do we really have to wait until our CTRs build up (by bidding high at the beginning) before we can get “Great” quality score?”
This is a really great question, and I’m going to answer it in several parts. You see there’s a quality score you get right away when you launch a campaign, but that QS (quality score) changes once Google starts collects data on your campaign performance.
FIRST STAGE OF YOUR QUALITY SCORE
Google assigns your keywords an initial quality score, when your first launch your campaign (before you get any impressions), based on two factors:
- How targeted are your ads to the keyword. Build tightly targeted adgroups and put the keyword in your Google ad at least once.
- Your landing page quality, which includes how targeted your page is to your keyword among other factors.
Remember your quality score ONLY effects your minimum bids & NOT your ad position (except for placement in the pink sponsored link bar). You can have 5% CTR on a keyword and STILL have a poor quality score.
You may start a campaign and see that most of your keywords has min bids of 0.05 or less. Don’t get too excited, your minimum bid can go up, WAY UP!
HOW YOUR QUALITY SCORE CHANGES OVERTIME
There’s two factors that may increase (or decrease) your minimum bids (ie QS) on your keywords overtime:
Low CTR: you’ve probably noticed this, if you initialize have a good quality score (ie low min bid) on a keyword, but that keyword ends up getting a CTR of 0.56% you’ll notice the minimum bid jump from something like 0.05 to 0.50!?! Ouch! If you’re having this problem with a keywords that’s producing a lot of sales, peel and stick it into a separate adgroup, make a customized ad just for that keyword.
High Bounce Rate: YES, Google does look at the bounce rate of your visitors, that is how fast they’re hitting the back button when they hit your landing page. This is why having compelling content on your site is a MUST, in some market adding a 30 second video can really cut down your bounce rates substantially.
FACTORS THAT EFFECT YOUR AD POSITION
There’s basically 3 main factors that effect your ad position:
- Your bid price
- Your CTR
- Your history
The formula goes something like this :
Ad position = (Bid price) x (CTR) x (history)
The history factor is most important when you’re just starting out your campaign. You’ve probably noticed that when you first launch a Google campaign, you don’t get a lot of traffic, however, once it’s been running for a while the traffic starts really kicking in.
This is a result of your ad position going up (as a result of building history) and getting approved for the Google search partners.
This is the history factor, overtime this factor converges to a constant value.
Think about this: The Adwords system is really based on a CPM model. Think about it your ad position is proportional to the CTR x (Bid Price), if you have double the CTR you pay 1/2 the bid price for the same ad position.
You’re really paying Google on a CPM basis.
I hope that answers your question Franklin! 
Pretty good overview.
You might also want to point out that the formula for calculating Ad Rank on the Content Network is a little bit different than for the Search Network. The differences are explained by Google here.
And please don’t perpetuate the myth that “if you have double the CTR you pay 1/2 the bid price for the same ad position”, because it’s not true. Yes, doubling your CTR will improve the QS used for Ad Ranking, but it will not actually double that QS because there many are other factors involved besides the CTR. If you want to “pay 1/2 the bid price for the same ad position”, you have to double the quality of ALL of the factors in the QS rather than just the CTR.
Hey Amit,
“Remember your quality score ONLY effects your minimum bids & NOT your ad position (except for placement in the pink sponsored link bar)”
Unless I’m misunderstanding your statement, I believe you may be in error:
“Quality Score influences your ads’ position on Google and the Google Network. It also partly determines your keywords’ minimum bids. In general, the higher your Quality Score, the better your ad position and the lower your minimum bids.”
From http://adwords.google.com/support/bin/answer.py?hl=en&answer=10215:
Nice post.
Amit, great info – I can honestly say I’ve paid $100’s for adwords guides that don’t sum it up as well as you have in one blog post.
Hi Joshua and Ghoti,
I was confused about how the quality scored played a role in your actual ad position for a long time. For speaking with Perry Marshall about this, I can tell you confidently that your ad position is determined by:
CTR X (Bid Price) x (a history factor)
I don’t care what Google claims, don’t expect them to publish this information. This is the best information I have on the subject.
Also, I believe that Google includes CTR is part of the quality score, and incidentally the only part (along with bid price and history) that effects your ad position.
I have 3 Google accounts and over 27 active campaigns, and have spend over a million dollar on Google this year alone, so trust me on this.
Great article Amit. I linked to it today on my blog. I am not sure why the trackback is not showing up.
Hey Amit, Thanks for the great info. Especially about the history factor. I’ve never read any info about that before.
From your experience do you think that the history factor is set in certain increments such as 7 days, 30 days, 60 days, etc. So, every time you go beyond that time increment it will help increase your ad positioning? Or do you think that it could possibly be calculated relative to your competition?
Also, what do you think Google calculates the history factor for? The campaign as a whole? Each text ad? Each keyword?
Hi Amit,
Thanks a lot for the detailed explanation! You really know your stuff
.
Inside the webpage that Joshua referred to: http://adwords.google.com/support/bin/answer.py?hl=en&answer=10215 , it lists 2 types of Quality Score, and I guess you were referring to the first one (i.e: the one for determining minimum bids)?
I’m well aware of domain history and account history. Now the next question… Lets say we take a new account and new domain. Then we run a bunch of content network ads and get a nice history going from that. Will it transfer over to search bidding/placement?
Hello,
Can i calculate CTR from getKeywordEstimate call of Adword API,
which has removed CTR and impressiond field from the API call ?
It reutrns me
[lowerAveragePosition]
[upperAveragePosition]
[estimatedAveragePosition]
[lowerCostPerClick]
[upperCostPerClick]
[estimatedCostPerClick]
[lowerClicksPerDay]
[upperClicksPerDay]
[estimatedClicksPerDay]
[estimatedCostPerDay]