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Introduction to the Google Ad Auction

September 18th, 2012 Leave a comment Go to comments

explanation of this major Adwords Auction change as described by Hal Varian, Google’s Chief Economist (9 min video).
Since Google implemented major changes in their Adwords Auction formula a few months ago, many companies are being penalized by Google in their Adwords campaigns (PPC – Sponsored Links) if their “Quality Score” is low. Quality Score is determined by CTR (Click Thru Rate), Relevance, Landing page & Ad quality. Many clients are unaware of this major change because it was not formally announced by Google & what’s worse, you may not be aware of the penalties that are occurring because of it!

The penalty for a low quality score will include a potentially higher CPC (Cost Per Click) than you might have otherwise paid & a reduction in Impressions or “Impression Share” which will negatively effect your overall ROI. The document attached explains how a client can view his/her Impression Share data & other trends thru Google’s reporting system. Many clients don’t know how to view this important data & if they do, they often think that the recent reduction they’ve noticed in their Impressions, ROI (return on investment), conversions, sales etc… are a direct result of the slowing economy, which in many cases may not be true at all – In fact, it may have everything to do with this Google change!

Duration : 0:9:12

[youtube a8qQXLby4PY]

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  1. watchupe
    September 18th, 2012 at 08:32 | #1

    clear information, …
    clear information,this is a good way to learn about your interface…thank you Hal Varian and all the Google team.

    September 18th, 2012 at 08:32 | #2

    Very useful …
    Very useful information…. thank a lot

  3. ryansteinolfson
    September 18th, 2012 at 08:32 | #3

    wow, great …
    wow, great explanation of quality score and its relation to cpc

  4. jangoboogie
    September 18th, 2012 at 08:32 | #4

    Konana brought me …
    Konana brought me here…. at 1:30.

  5. sparkerthinkbig
    September 18th, 2012 at 08:32 | #5

    i agree -thank you 
    i agree -thank you 

  6. BrandingArc
    September 18th, 2012 at 08:32 | #6

    This is the best …
    This is the best explanation of the Google Adwords auction that I have seen!

  7. jcabotl
    September 18th, 2012 at 08:32 | #7

    While this all …
    While this all sounds terrific and simplistic mathematical formulas, there are a number of key ingredients that you have failed to mention here Hal.

    1. You are docked if you’ve had an add that didn’t perform well and your adds won’t show.

    2. If you have keywords that didn’t perform well, you are again docked and your adds won’t show.

    3. You can have the best keywords with the best relevance and landing page specific to your add and still get docked without a very high CPC.

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