Adwords' Top Ad Placement Formula is Changing
Google has announced that its formula for placing PPC Ads in the top position (above organic results) is changing.
The change is designed to improve the quality of ad results, and to give advertisers more control over achieving top ad placement.
Top ad placement is governed by price and quality & Google will not be changing this. However, they are improving the way they factor price into the formula. They are also adjusting the way actual cost-per-click (CPC) is determined for ads in top spots.
Read below for more details - (taken from Google's announcement)
In the current top ad placement formula, we consider your Quality Score and your actual CPC, which is determined in part by the bids of advertisers below you. Even if you have a high quality ad, if advertisers below you are not bidding very much, your actual CPC may not be high enough to qualify your ad to appear in a top position.
With this new formula, instead of considering your actual CPC, we'll consider your maximum CPC bid, which you control. This means that your ad's eligibility to be promoted is no longer dependent on the bids of advertisers below you. Therefore, if you have a high quality ad, you now have more control to achieve a top position by increasing your maximum CPC.
Your actual CPC will continue to be determined by the auction, but subject to a minimum price for top spots. The minimum price is based on the quality of your ad and is the minimum amount required for your ad to achieve top placement above Google search results. As always, the higher your ad's quality, the less you will pay. And you will never be charged more than your maximum CPC bid.
How might this affect me?
We anticipate that most of your ads will continue to perform as they have in the past. In some cases, you may see that ads previously shown alongside search results are now shown in top spots, and vice versa. As a result, you may see a change in the average number of clicks and average CPCs for impacted ads.
Make sure that you check your stats regularly and adapt your campaigns as you see fit. Here are some quick tips:
If you do not want ads that usually appear in high positions alongside search results to appear above search results, check that their maximum CPCs are not dramatically higher than the actual CPCs you normally pay.
Continue to make routine quality optimisations to keep your costs down and your performance high.
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