Insights on the AdWords Auction
Hal Varian, Google's chief economist, provides an in-depth and insightful overview of how the ad auction works. Hal describes how the auction system works so that consumers always see the most relevant ads and advertisers get the most value. He also provides insight into the key components of ad rank: bid, quality and formats, and the way all of this works together to determine your ad's position and cost.
Introduction to the Google Ad Auction
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!