When Paying Less Can Get Greater Online Advertising Results

CPC and Quality Score
For those of you who currently have or have previously had a Google AdWords account you know that the process of setting up a Pay Per Click (PPC) campaign with Google looks fairly easy. You generate keywords, you write short little ads, you decide how much you can reasonably afford to spend on your ads, and then you shell out the money to Google. The way many online advertisers go about budgeting for their PPC campaign is by using a simple logical formula: figure out how many clicks you want per day (say 10), figure out how much you can afford to spend per day (say $4.00), and then divide $4.00 by 10 clicks to get $0.40 and bid that much per word. That formula, however, is the wrong way to go about deciding on how much you will bid on each keyword. The problem is that that formula can get you in a dangerous mindset where you assume that by paying $0.40 per keyword you are getting a ranking in the paid search results commiserate with that value. So, later on down the road say your company grows and now you can afford to pay $0.60 per keyword, you increase your bid and assume you are going to be ranked higher. Google profits greatly from this incorrect assumption. In reality though, the Cost Per Click (CPC) bid is only one factor involved in the determination of paid search results ranking, which means that there are ways to increase your ranking without having to pay more money. Your ranking is determined by your CPC bid multiplied by your quality score.

Quality Score
While your CPC bid is certainly one factor used in determining your paid search results ranking for your Google AdWords campaign, the other factor is your quality score. Essentially your quality score is a value that Google assigns to each keyword you are using, which measures its overall “quality” in regards to your ad group and your campaign. Your quality score is not a number that Google will let you have access to, nor will they give you the exact algorithm they use to determine its value but they will disclose certain factors that make up your keyword’s quality score:

  • The historical Click Through Rate (CTR) on the Google network
    Google has access to very advanced reporting tools to track all keywords that are being used on their network and will evaluate your keyword based on the historical performance of that keyword. By using averages from such a large data pool it gives a good estimate of how the keyword will perform. If one or more of your keywords shows that Google does not have enough information to make a CTR estimation for one of your key words it means one of two things- either not many advertisers are using that key word, or not many searchers are looking for that keyword (or both). Often times this will happen if your keyword is too specific (for example: “glow-in-the-dark child’s arts and crafts paint”).

Click Through Rate

  • The account’s historical CTR
    If you are a new user Google will obviously not have any information on this particular factor but if you have an existing account with them they will look at how your account has done historically. Basically the reason they look at this aspect is to reward online advertisers who are working hard to create high-quality relevant ads and punish online advertisers who try to cheat the system. Google’s primary concern is to make their search engine the most reliable and the easiest for searchers to use. If online searchers go to Google and cannot find what they want or see misleading ads, they are more likely to use a different search engine; so Google rewards the online advertisers that help make their search engine the highest quality it can be. Therefore, if you create a number of well structured and professional ads Google will evaluate that as a benefit to them and count it positively toward your quality score. Oppositely, if you try to buck the system and create false and misleading ads (say an ad that reads “Discount Mobile Phones” but actually leads customers to a site selling male enhancements) Google will reduce your quality score.Also, it is speculated that Google, like any other businesses, tries to reward customers that have been advertising with them for a long time. Therefore, it can provide you with an advantage to go through a company already well established with Google to get a slight quality score boost.
  • The historical CTR of your display URL
    The ad text reviews that Google does can also read your display URL and see what the CTR has been like with that URL over time. For that reason, you would want to make sure to keep consistency among your best performing campaigns- not changing the display URLs frequently.
  • The quality of your landing page
    Google has created very advanced systems to crawl your landing page simulating an actual user’s experience with that area of the site. Their systems can identify keywords, phrasings, level of readability, etc. on your landing page to determine if it is relevant to the online searcher’s search terms and intent. Say for instance you use “info about sports cars” as a key word but then everything on your page is related to buying accessories for Porsches- Google will count this loose connection against your quality score.
  • The keyword’s relevance to the ad
    If your ad text is optimized for relevance to your keywords Google will reward that. Using keywords in your ad text is a good way to create obvious strong connection between your keywords and your ad. You should also include in your ad text phrases that pertain to your keywords and an appropriate call to action. For instance if you are selling sleep aids you would may want to use phrases like “fall asleep fast tonight” or “get a restful night’s sleep” as well.
  • The keyword’s relevance to the search term
    Obviously the most important part of setting up a PPC campaign is generating relevant keywords to use. Google uses the relevancy of the searcher’s search term to your keyword to help them determine the quality score when your ad displays. For instance, a search term of “chocolate chip cookies” would be highly relevant to your keyword “fresh baked chocolate chip cookies” but a search term of “chocolate cookies” would be less relevant to your keyword “fresh baked chocolate chip cookies.”

As you can see, your online ad’s ranking is much more complicated than most small advertisers realize. Creating, optimizing, and managing your campaign can be a full time job. As Google and other search networks continue to make updates to their ranking and pricing structures you will want to stay in the know- so read blogs, participate in forums, and buy some books, or hire a professional. Your online advertising campaign does not have to cost you a lot of money to get great results as long as you are well educated when it comes to creating and managing the campaign.

Let Volusion’s experience work for you!

-Kate Pierce eCommerce Specialist

3 Responses to “When Paying Less Can Get Greater Online Advertising Results”

  1. Peter

    Oh it’s really nice blog about online advertising. Online marketing is really gaining rapid popularity. To promote our site or product we have to do advertising so that people should know about it. Even i used to promote my site and sell my product online through full servicead and my business is really growing. Nice post.

    Reply
  2. inmobiliaria madrid

    In the beginning, I didn’t know much about Google’s PPC, so, I purchased advertising with them. But, without any prior experience, I lost all my money with zero results. From then till now, I prefer free traffic getting formulas like, backlinking, article marketing, social bookmarking etc.

    Reply
  3. wesley

    pay per click campaigns through google and yahoo are very costly. If your budget is low i would not recommend it. Anyways it only generates short term traffic as soon as your campaign funds dry up you lost that traffic. If you want to generate steadier traffic it takes some work, but it is also free. Begin writing blogs, articles, and other content to post at article directories. Your traffic will be targeted and continuous.

    Reply

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