October 25, 2008 by Matt Thomas
Clients of ours who advertise online (that’s basically all of them) often ask us about Google’s ‘ad auction’ system. They usually want to know why Quality Scores are part of Google’s equation for deciding which ads come up, in which position and how often. Many are annoyed that they can’t just simply buy their way into top sponsored link position. On the face of it, their argument would appear to be justified – surely in the commercial world money should be the major factor. However, unfortunately, as ever, it’s not that simple.
Google needs to take both ad quality and cost per click (the maximum you are willing to pay per click) into account when deciding ad rank. Google is looking for an ad that will give them good value over time, which means an ad which has a high cost per click but also a strong rate of click-throughs (a major part of the quality score). They essentially times the CPC by the quality score and decide the frequency and position of the ad.
To be honest this is fair enough as it takes account of disparity within industries. There is after all a world of difference between someone selling Rolexes and someone selling cheap digital watches. The Rolex salesman is probably prepared to pay a large amount per click, but won’t get that many, whereas the digital watch seller is going to get a lot of clicks on the cheap.
The Google equation ensures that one or the other doesn’t completely swamp the sponsored links, so that both those who want expensive watches and those who want cheap watches are satisfied.
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