Quality Score up, CPC also up !?!

[Narayan]

I recently managed to get my main keyword to a 9/10 Great Quality Score in Adwords, mostly due to an improved ad with higher CTR. I mainly did it to lower my Clickprice CPC to be on the first page.

But the CPC went up! From $1.25 with a CTR of 2% and a QS of 7/10 to $1.75 with a new CTR of 6% and a QS of 9/10.

To have a valid test, I reactivated the other text-ad, went back to CTR of 2% and after 20 minutes to a lower CPC of $1.50.

This seems to be a total paradox. Can anybody explain this please?

[iForumulaSuccess]

That's gonna happen. Set your bid limit, set your ranks. If you are ranked number one, you will pay more than number 2 or 3 no matter what your quality score is. I learned that the hard way. Now I have set all my bids manually and my ranks for each keywords the # 2 to 5 position. I used to pay over 50 cents per lead and now I pay around 5 cents per lead.

[Narayan]

Hi iForumulaSuccess thanks. Just to make this crystal clear: we are talking about the first page bid. If there are 10 ads displayed (3 top + 7 right) to be in spot 10 I have to pay $1.25 with a Quality Score of 7/10 and $1.75 with a Quality Score of 9/10. This is mixed up.

All

Information from Google

and also Common Sense says that this is wrong.

I have one idea though: Maybe it is about the wording in the ad (my High CTR ad has the word "exposed" in the headline) and also maybe about the history of the ad? Is Google using Conversion Rates? But shouldn't that be reflected in the Quality Score? Wicked!

[Samos]

Very nice video, didn't really know how adwords exactly worked.

Wish I watched it earlier.

[Lucid]

> If you are ranked number one, you will pay more than number 2 or 3 no matter what your quality score is.

Actually, that is not always true. In fact, about 75% of the campaigns I manage for clients, the actual CPC spent is lower for the first position.

Narayan doesn't say the effect on ad position going from a 2% to 6% CTR. I suspect it jumped by a few positions, which is what you normally want. The CPC you pay will depend on what your competitors are bidding and their own QS.

It sounds like Narayan's competitors have good CTRs and willing to pay more than he was. He now has a better ad which is causing him to join the elite ranks of those with similar CTRs and willing to bid higher (must be a competitive area).

I think an ad getting three times the click rate and paying 30% more is a good tradeoff. This assumes conversion rates are the same or better. You have to track CTR times conversion rate for each ad position.

You also can't test for half an hour. Well, you can but it doesn't tell you much. Narayan, stick with your 6% CTR ad.

[dburk]

Hi Narayan,

Lucid's reply is spot on.

Have you let the newly optimized ad run long enough to generate 2000 impressions? You won't get the full benefit of your improved CTR until the AdWords system has completely cycled through a new re-evaluation cycle.

Try letting the optimized ad run for a while and you may see the bids drop.

There cold be other aggravating factors like another bidding testing bids or doing day parting bids. It takes time to normalize the the data and generate a large enough dataset for valid results.

[iForumulaSuccess]

It has been about a week now. I am curious to hear what your latest results are. I have been experimenting with a few different strategies while keeping my basic fundamentals the same (limit position to the 2nd to 5th position and individualized bid limits).

I even through in new keywords that are similiar to my strongest keywords and those keywords are costing me more. About 19 cents versus 4 to 7 cents for my best keywords.

The ads are still performing at a quality score of 7 to 9 for all keywords. So how are you doing with your campaigns?

[Netcel]

Originally Posted by Lucid

>
I think an ad getting three times the click rate and paying 30% more is a good tradeoff. This assumes conversion rates are the same or better. You have to track CTR times conversion rate for each ad position.

You also can't test for half an hour. Well, you can but it doesn't tell you much. Narayan, stick with your 6% CTR ad.

I disagree with this. If conversion rates have stayed the same then all that has happened is Cost Per Conversion has risen by 30%! He's not paying 30% more for 3 times the clicks, he's paying 30% more for every click.

In my experience positions 2-4 tend to yield the best returns, it's not all about being number 1

[Lucid]

> If conversion rates have stayed the same then all that has happened is Cost Per Conversion has risen by 30%!

True. But since you have more traffic, you make more sales. Therefore, you make more profit.

Suppose each sale you make is $30 and conversions are 10% and you paid $0.25 per click when CTR was 2% and $0.30 when it is 6%. For every 1000 impressions, you spend $5 at 2% CTR and $18 at 6%. There are 20 clicks at 2% resulting in 2 sales ($60 in total sales) and 60 clicks at 6% CTR resulting in 6 sales ($180).

The profits are $60-$5 in Adwords costs = $55 profit at 2%.
$180 - $18 = $162 profit at 6%.

Umm. I make $107 more in profits by having an ad pulling in 6%. I think most of us would take more money every time.

> He's not paying 30% more for 3 times the clicks, he's paying 30% more for every click.

Read carefully. He's paying $1.75 PER CLICK and getting a 6% CTR when he was paying $1.25 for 2% CTR. That's 3 times the traffic and paying only $0.50 or 30% more. Yes, he's paying 30% more for each click but his CTR tripled.

> In my experience positions 2-4 tend to yield the best returns, it's not all about being number 1
Agree it's not about being #1. Best ROI positions will vary depending on niche but 3-6 seems to be the sweet spot for many.

[dburk]

I'm siding with Lucid on this one. I have seen keywords in certain types of industries where the #1 ad position converts many times higher than all the lower ad lower positions. Even with $10 bids it was way more profitable than lower and cheaper ad positions.

You can't make a blanket statement on this and always be correct. Each niche, keyword, ad text, ad position and landing page combination can be very different. Why guess when you could know? Test and let your results guide you.