A Simple Explanation of Google Ad Auctions and Applying SEO:
22nd August, 2021Start Reading
For any online business looking towards digital marketing, they may not be able to wrap their heads around how exactly Google auctions off their advertisement. Understanding Google's auctioning system for ads will help any search engine optimization or other digital marketing efforts more impactful. Here, we have given a simple explanation into how Google Ads work and the search engine optmisastion that can be explored to assist.
What is Google Ads anyway?
Google Ads is what determines the top of the advertisement section any Google's Search Engine Results Page (SERP). It's job is to allocate specific advertisements based upon bid amount and quality of pages.
Cost Per Click (CPC) Method of Payment:
Cost Per Click (CPC) invovles paying of Google Ads based upon the amount of clicks on the link to a landing page. For instance, in CPC you pay $1.01 for every click on the advertisment to your page towards Pets.com.
How does Google Adwords Determine a Position of a CPC Bid?
When making a bid in the form of a Cost Per Click, it uses the following formula:
Max Bid x Quality Score = Ad Rank Score
Where the Max Bid is the max valuation a business is willing to pay for a specify keyword and quality score is the metric of page quality. This is how you determine the placing in the auction, but not how much it actually costs. So, if you have a Max Valuation of $5.00 and a quality score of 20, the add rank score is 100.
How does Google Ads Determine the Amount Paid of a Cost Per Click Bid?
Google Ads auctions works on a modified version of a Generalised Second Price Auction. Essentially, the position paid is determined is paid by the highest ad rank, but the actual cost is determined by the price paid by the second ad rank. But, Google modifties the on that second price auction in that the quality score of a website makes a Cost Per Click Bid cheaper. Here is the exact formula for the price paid for a CPC bid:
Price Paid = The Ad Rank Score of the Person Below You/Quality Score +0.01
In context of ranking first in say "bikes" for instance, there is three bids for three websites:
- Bikes.com Ad: Max Bid of $3.00, Quality Score of 20 and Ad Rank Score of 60.
- Fastbikes.com: Max Bid of $4.0o, Quality Score of 10 and Ad Rank Score of 40.
- Speedybikes.com: Max Bid of $2.00, Quality Score of 8 and Ad Rank Score of 16.
In this case, Bikes.com reaches the top position with an Ad Rank Score of 60. But, the actual price paid by Bikes.com is $2.01, which is Fastbikes.com has an Ad Rank Score of 40, divided by the Quality Score of 20, with $0.01 added onto any price paid. For Fastbikes, they will get 2nd position from an Add Rank Score of 40, but will pay a price of $1.61, as their exists an Ad Rank Score of 16 divided by a Quality Score of 10 plus the additional amount of $0.01. These bids have a miminmum of $0.05 and a maxmimum of $50 for Cost Per Click.
What determines the quality score?
The quality score of a Google Ad bid is the metric at which Google judges a sites relevance to the keyword and quality of the contents of the page. Google hasn't publicly disclosed all factors that go into consideration of their Quality Score, these include:
1) Click-Through-Rate (CTR): The rate at which an advertising link on Google is clicked, this is the measure of organic traffic to a specific advertisment. This is compared towards a mean click through rate in a category.
2)Relevance of Keywords: How relevant the writing of your advertisement to a specific keyword for bidding. For instance, if your advertising on "architect," keywords such as "bauhaus design" and "residential projects" may increase the quality score.
3) Landing Page Quality: The quality and revelance of content on the actual page being linked towards. This involves both technical performance of pages (how fast your page performs when compared to other pages) and page content (what keywords a specific page content has).
4) Historical Google Ads Performance: Your history of advertisment on Google Ads effects the future peformance of advertisments. So, if you historically have bids that have consisted ranked well, it will be more likely to rank better.
How do I improve my quality score using SEO?
Key to improving your quality score is implementing Search Engine Optmisiation (SEO) techniques on your website to increase the overral quality score of a specific advertisement ad campaigns and website content. At SocialMindr, we specialise in improving overall page quality and offer specialised SEO services. However, these are general technqiues used improve quality score:
1) Keyword Research: Using software packages for website audits (link is here to an article of website audits), such as SEMRush, can be used to find relevant keywords. Directing writing of a single page to relevant keywords to articles.
2) Optimising Landing Page: Making sure that your landing page has good technical perforamce (fast loading times), has logicial flow of structure (do links on the page make make sense) and does the landing page directly connect to the advertising. In terms of website builders, we have an article here that can help designing a landing page.
3) Establishing Backlinks with Other Sites: A sites authority and quality can be determined through how many other link it. Pursuing external media linking towards your wesbite, such as writing guest blogposts and asking former clients to link you. For a more detailed guide on establishing backlinks, here is the link here.
4) Competitor Research: Knowing how competiting websites set up their own website. In particular, aspects such as the keywords they use, the category they target and the relative performence of their website is highly important.