ClickEquations Blog

All the recent talk about Quality Score got me to finally figure out how to build a ClickEquations Analyst template that I’ve been wanting to for some time now.

It shows you all the keywords whose Quality Score has changed from the prior period. It could be yesterday vs the day before, this week vs last week, or last month vs the month before.

So you can try to figure out why. Or make a new bidding decision. Or just marvel at the mysteries of Google.

Like all ClickEquations Analyst reports, to use it you simply open Microsoft Excel, open the report, and open the ‘Quick-Change’ palette to select the date range you like to report on.

Click Apply and hold your breath, in this case, for about 90 seconds.

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The image above shows a zoom-in on the core data the report provides. There is one tab in Excel for the Quality Score gainers and another for the losers.

Click the thumbnail image to the left to see an enlarged full page of the ‘Gainers’ report.

This new report will be released to ClickEquations clients as an Analyst template set update in the very near future.

If you can’t wait that long, email support and we’ll get you a copy.

You don’t use ClickEquations for PPC management, reporting, and bidding? Click Here.

Because you can bid less and still have your ads shown on the first page.

In my experience it isn’t unusual to see the following:

A Portion of The Keyword Report from ClickEquations

On the top line we see a keyword with a FPBE of $1.93, a MaxCPC of $1.50, and an AvePos of 2.82 (clearly on the first page). And we see a healthy impression count. It seems like something doesn’t add up.

I can only surmise (I have no direct information from Google on this) that this proves it really is an estimate. The actual bid required to be on the first page varies on a query-by-query basis. (Our post on the Quality Score discount or penalty.)

This makes sense given what we now know about how Ad Rank is calculated and the fact this is done in real-time for every query. So for each search Google:

1. Calculates the Quality Score of each bidder, then
2. Calculates their Ad Rank to determine position, then
3. Determines price based on the Ad-Rank and Quality Score, then
4. Figures out if any ads are eligible to get a Top Position, then sometimes
5. Decides how many ads they want to show

So there are two chances for your ad to not appear on the first page:

1. Your Ad Rank is too low to earn a spot on the first page.
   This (again) is Bid x Quality Score so you have to variables to work on to fix this.
2. Google limits the number of ads they display, even though there are more bidders.

What This Means For Bidding and First Page Bid Estimate
You shouldn’t feel compelled to bid all the way up to or past the FPBE number. Check your Average Position, and Impression counts before making a decision.

The effect of seeing the First Page Bid Estimate is to feel compelled to raise your bid to hit it – at least. That might be a good idea, it might not, and it may not be necessary (assuming your goal is a page 1 appearance with 100% Impression Share).

Test the impact of bids around the FPBE on both your position and impression count – it’s possible you’re below but losing very few impressions.

What Else It Means
Google is still hiding too much from advertisers.

The move to First Page Bid Estimate was a positive one, but we’re still not told:

• How they decide how many ads to show for any given query,
• How they establish minimum bids for a particular query (the price the lowest appearing person pays)
• How they determine the bid requirements of a Top Position (and what it is for any particular keyword or query)
• And our only clue about any of this – Impression Share – is still available at the Campaign Level only.

We’re left guessing and testing when we’re rather be considering and deciding.

NOTE: This is the 2nd post in a series. The first one is here.

While Google’s Adwords Quality Score gets a lot of attention, an important and somewhat related keyword metric – the First Page Bid Estimate – hasn’t had quite as much coverage.

I’m going to tackle this one in two parts, today talking about how to monitor your FPBE’s (First Page Bid Estimates) and then in a future post digging deeper into the philosophy, politics, and implications of this metric. (You can tell that’s going to be the fun one.)

In the Adwords interface, the First Page Bid Estimate can be found on the Keyword Analysis page, which requires you first to mouse-over the magnifying glass icon next to the keyword, and then choose the ‘Ad Showing: Details and Recommendations’ link.

First Page Bid Estimate in the Keyword Analysis Window

Of course, you probably don’t care about the FPBE unless your current MaxCPC is below it. These keywords are more clearly identified, with a simple message shown below the Status indicator for each keyword.

First Page Bid Warning in Adwords

You can also add ‘Est. First Page Bid’ to a Keyword Performance Report in the Adwords Report interface and the metric has also been added to the latest version of the Adwords Editor.

In the Adwords Editor, you can even select the entire account, sort by the FPBE, and see your current Quality Score and MaxCPC in adjacent columns. This is the most useful presentation as those are the three metrics you need to both understand and use to decide on corrective action.

First Page Bid Estimate in Adwords Editor

First Page Bid Estimate Report – In ClickEquations
In ClickEquations we wanted to make use of First Page Bid Estimates even easier and more convenient.

So like the Adwords Editor, we provide the FPBE, Quality Score, and your MaxCPC next to every keyword so you can always keep an eye on these important metrics. And you can easily sort by any column to spot issues or trends.

ClickEquations Keyword Report with First Page Bid Estimate

But using ClickEquations Analyst we’ve taken it one step farther, providing the First Page Bid Estimate Report.

This Excel Template makes it easy to see your current keywords, sorted by FPBE in descending order, along with the corresponding QS, MaxCPC, Ave Position, Campaign & AdGroup names – plus a red-alert warning when you need to raise your bid to hit the FPBE.

First Page Bid Estimate Report in ClickEquations Analyst

Just by glancing down this column you can see which keywords require attention, and how much that attention is going to cost you. The data in the report can be updated with a single-click.

Keywords in your account which are currently bid below their First Page Bid Estimate are either not showing (if they have a low Quality Score) or showing at a highly diminished rate.

In effect, you’re currently not actively advertising on those keywords, which is why we think this kind of quick summary report is important.

In Part II of this post we’ll dig deeper into the why’s and what-to-do’s of the First Page Bid Estimate.

On Tuesday and Wednesday this week we’ll once again be at the Hilton Hotel in NYC for SES.

Stop by our booth (#328) to see ClickEquations in action – get a demo, ask some questions, sign-up to get your own account.

Of course, if you’re not going to be in New York, you can still get a demo, ask some questions, or sign-up to get your own account. You just won’t have to pay for cab fare or get any free pens or squeeze-balls.

• Didn’t the Microsoft Analytics suck anyway? Hasn’t every MS search thing sucked? (except some lab tools) ‘Til they buy Yahoo, who cares?
• Rest of the day working on my ebook ‘High Resolution PPC’ – Need to finish this dang thing! Twitter, please leave me alone for a while…
• RT @PPCPROZ: RT @MartinAssmann: A lot of favicons in Google AdWords Ads. A result of todays maintenance? http://twitpic.com/23l0d
• Another ‘I’ve got the secrets’ scam, but have to admire his ability to write hype-driven copy devoid of content. http://bit.ly/3PRlGU
• RT @dberkowitz: hot tip: David Meerman Scott’s ew book World Wide Rave is free on Kindle, iPhone through Tues http://bit.ly/2368d3 #
• How about a @wefollow widget/service that automatically follows anyone who self-selects into a certain tag group?
• Watching the FutureNow OnTarget Video. http://bit.ly/2vRoF2
• Editing a Quality Score article for the spring issue of Electronic Retailer magazine.
• 3 hours left to enter. #PPC advertisers, drawing tomorrow for free year of ClickEquations. http://bit.ly/uaAek
• The process of choosing our winner has begun.
• Contest Winner Selected via two stage process. First, each person at ClickEquations chose a number within the range of our follower count.
• Then these randomly chosen numbers were placed in a hat, shaken profusely, and our CEO @LucindaDH picked the winner. Announce tomorrow AM.
• Thanks to everyone who now follows us, we’ll cool the promo’s and get to hard core #PPC tweets for a while.
• Just did a live guest shot on #ppcrockstars while driving to little league practice. Go listen live.
• DeTweet @thegoogleguy: reduced bounce rate = better QS! (There has been no official suggestion that bounce rate is a QS Factor) Pure Rumor.
• ‘if it bothers you you’re a moron’ -Jackie Mason ends the debate about offensive speach.
• Disabling FaceBook Connect on Disques blog comments because it obscures every referring URL in WordPress.
• ClickEquations Contest Winner is @george_revutsky of ROI Works wins a free year of our #ppc management platform. http://bit.ly/QQrJt
• RT @searchbeest: Why in God’s name are keywords case sensitive in Adwords Editor?
• RT @szetela: The Importance of the Display URLs in #PPC Ads: http://bit.ly/mp5kc
• iPhone SW 3.0 looks awesome. Bet there is a new iPhone model or 2 by the time it hits in June. Can’t wait.
• RT @adCenterBlog: New Post: adCenter Announces New Conversion Tracking Options http://tinyurl.com/cc3nrd
• Search is often amazing. But search often still sucks. Still, it seems funny for Microsoft to be pointing this out. http://bit.ly/10J8j
• Point clarified in the new QS google video , if your ad is right above mine, my MaxCPC is your ActualCPC.. Hadn’t realized that.
• So failed attempts to get TOP rather than SIDE position, by raising CPC can cost competitors money, possibly not you. Complexities abound.
• DeTweet’ing My Own Tweets – Letting the Google QS Video sink in for a few days and I twisted it around. My earlier tweets plain wrong.
• Going to really dive into it and write a big blog post – better place for such an important point. Thanks @JezChatfield for correction.
• Mr. Watson – Come Here. I Need You. http://bit.ly/TuGxj Alright, not that huge but I think I figured out something helpful. Details soon.
• RT @prebynski: Kevin Lee’s “The Truth About Pay-Per-Click” @ http://tinyurl.com/clrjnk #ppc #pay-per-click (Just bought Kindle Edition!)
• Quality Score Economics Revealed: New blog post details how QS raises or lowers your CPC. http://bit.ly/yXH24
• Bad news: Newark airport. Good news: Destination Steamboat CO
• ClickEquations booth, demos, & team will be at SES NY without me – stop by say hi.

Get our Tweets in real-time! Follow us @clickequations.

In the paid search world, Quality Score is the new black. Blogs, forums, conferences, and Twitter are full of discussions of what quality score is and how you can optimize it.

But the real importance of quality score has been a bit hard to pin down. Not any more – we’re going to reveal the exact $$ value of quality score.

UPDATE: Since this post was written, we’ve learned an important new fact about Quality Score – the numbers we’re shown are reported as integers between 1 and 10, but these are not the numbers or scale Google applies to in their formulas. Rather, they’re representative of the actual Quality Score in terms of 1 being poor and 10 being great. Knowing this, it seems unlikely the specific math and results described in this post are correct. The positive and negative effects of good and bad quality score remain true, and hopefully the numbers are roughly proportional. We’ll update this post further when we get more information.

Why Does Quality Score Really Matter?
The prominence of quality score has been based on it’s role in Ad Rank – the formula Google uses to determine the position in which your ad appears. Ad Rank = Bid x Quality Score.

But Quality Score also plays a very important role in determining how much you’re charged per click. This is a separate application of the value which occurs after Ad Rank is calculated.

The recently released Google Video by Google’s Chief Economist, Hal Varian helped clarify this point.

In the video Mr. Varian points out that your cost-per-click is calculated using the formula: Ad Rank of the ad below yours / your quality score.

So if you’re in position #1 with a quality score of 5, and the ad in position #2 has an Ad Rank of 10, your cost-per-click is 10/5 = $2.

So What Is Quality Score Worth?
Knowing this is how cost-per-click is calculated, we’re able to determine the specific impact of any quality score on your cost-per-click.

And therefore the exact cost or savings from any single-digit increase or decrease in your quality score.

Yes that’s right – we can tell you the specific change in your CPC that is due to the quality score you’re getting for each of your keywords.

For example, your QS=10 keywords are enjoying a 30% CPC discount as compared to if they were QS=7 and in the same position. And your QS=4 keywords are paying a whopping 75% premium for their position.

The table below contains the complete list. This details the positive or negative impact quality score is having on the CPC prices you’re paying.

These factors are true regardless of your bid, position or those of your competitors. These are the impacts of Quality Score on your cost-per-click, anywhere, anytime.

As you can see, there are serious savings to be had with high quality scores (8, 9, or 10) and very high penalty costs to low quality scores (6 or below).

How We Calculated These Numbers
We calculated these values by comparing the impact of quality score on the price established at a wide range of Ad Rank values. This analysis showed that when QS was applied as the denominator of the equation, the Ad Rank values didn’t matter – the impact of each step of quality score was consistent. (Check out the raw data). So it was a simple task to compute percentage of impact each different QS had on CPC.

Note that we set QS=7 as the neutral value because using ClickEquations to review a wide range of accounts we’ve seen that QS=7 appears to be the mean quality score across a very large and diverse set of keywords.

In other words, most keywords get QS=7, that’s the typical score. So quality scores better than 7 can be considered better-than-average and thereby beneficial, and quality scores lower than 7 are lower-than-average and detrimental.

Two Important Disclaimers

1) Since quality score is used to first compute the Ad Rank and then to influence the CPC, you wouldn’t actually have the position you do if you didn’t have that quality score.

So it isn’t exactly accurate to say that your keyword is paying 30% less for position 1 at QS=10 than at QS=7, because in most cases you wouldn’t be at position 1 if you did have a QS=7. I think the relative value for each QS remains valid and valuable.

2) Google very likely calculates quality score not as an integer but as a real number (you your QS isn’t actually 6 but rather 6.329498) which means the impact would be more linear and not in the big steps the charts suggest. Thanks to commenters for pointing out that this fact was left out of the original post.

What Does A 1-Point Change Cost You?
Based on the same numbers, this next table documents the economic cost or benefit of having your quality score move up or down by 1 point.

As you can see, if your QS=9, then moving up 1 pt (to QS=10) will give you a 10% CPC discount. Starting from that same QS=9 and losing 1 pt (to QS=8) will result a 12.5% % CPC increase.

A Clear New Reason To Improve Your Quality Score
Knowing that your quality scores are saving you up to 30%, or costing you up to 133%, should further motivate everyone to both know and work to improve your quality scores.

In ClickEquations we have a lot of features that can help you improve quality score:

• We list QS (and the related Min First Page Bid) right next to each keyword so you can watch them carefully.
• Our ClickShare metrics tell you which ad groups and keywords aren’t getting as many clicks as they should – and why – which can help you drive up CTR which is by far the largest driver of quality score.
• Our ClickVariance metric tells you when you’ve got keywords in ad groups which are under-performing based on CTR, so you can move them into their own groups and write more applicable ads, or pause/delete them – thereby driving up average CTR
• Our complete search query detailed reporting lets you add new keywords and phrases that users have proven that they click on
• Our multivariate text-ad testing tool is the best possible way to drive up CTR – often by 2X-5X which skyrockets quality score
• The Quality Score Distribution template in ClickEquations Analyst lets you keep a direct eye on how your entire campaign is doing relative to Quality Score – and we’ve just updated it to show the actual $$ saved and expended due to the quality score cost numbers released in this post.

Click To Enlarge

And A Warning
One small word of caution regarding the existing, and likely to continue, flood of tips on improving quality score. Be very suspect of anything which promises to improve quality score by any method other than improving click-through-rate.

Relevance has it’s place. But both the new Google Video and other recent disclosures make clear that CTR drives quality score. You will not have meaningful impact getting your keywords into your text-ads, grouping keywords in better ways, and many of the other tactics getting over-hyped in some quarters. Relevance plays a supporting role, as does landing page to an even lesser degree, but both are trumped and trounced by CTR. Get great CTRs and you’ll get great QS’s. There is no other route.

Summary
We hope you’re as excited as we are about the discovery of the true economic benefit and cost of quality score.

Another small victory for transparency in the paid search process. Which means another tool to help us manage PPC in High Resolution.

To learn more about quality score, read our complete Quality Score blog post series from several months ago, or check out the replay of our recent Quality Score webinar or our SMX presentation on Quality Score Tips on video.

About three weeks ago we announced a contest to attract new Twitter followers, offering a free year of ClickEquations (full details here) to a randomly selected person or company who was following @clickequations as of 3/15/09.

Yesterday the selection was made, and we’re please to announce that the winner is George Revutsky of ROI Works in San Francisco. On twitter you can find him @george_revutsky.

As our winner, George will be able to use ClickEquations Paid Search Platform for a full year, for his house account or one of his clients, without charge for up to $1MM per month in paid search spend.

Thanks To All Our Followers

We appreciate everyone who has joined us, and follows us @clickequations, and hope that our tweets continue to be a helpful part of life in the world of paid search.

A number of people followed up to last week’s ‘Bidding on Brand Terms‘ post and asked how the logic applied to the broader world of buying PPC keywords where you already have organic rankings.

Generally I think the logic does apply, but with a slightly different set of rules and conditions:

• If an organic keyword is highly profitable, I would assume the paid keyword would be profitable and incremental unless proven otherwise. There certainly could and will be exceptions – if it’s a highly competitive keyword with insanely high prices for example – the competitive PPC bidders may be acting irrationally and you may be better off to take the free traffic and let them kill each other. Another example might be broad terms with a lot of organic clicks and just a few conversions. But determine this via tests not assumptions.
• Cannibalization should be more than offset by incremental traffic. Yes some people who click your paid ad would have clicked your organic ad. But many who click your paid ad would not have clicked your organic ad. I firmly believe that there are paid clickers and organic clickers and a smaller minority who’ll go either way.
• Marginal Net Revenue is all that matters. If you’re making $1000/day with organic alone, and make $1200/day (net profit not gross revenue) with organic plus paid, then organic plus paid is better. The internal fact that some of that revenue could have been had at a lower acquisition cost is irrelevant.

And More Importantly
Organic results are all exact match. When you rank highly for an organic search, in most cases you don’t rank equally well for any/many of the thousands of variants of that query. Every organic result is computed independently.

But when you buy that same organic keyword as a paid keyword, you get to use match types to cover hundreds or thousands of queries – the vast majority of which you’d never win – or perhaps even appear on the first page for organically.

So when you find a winning organic keyword and transfer it to paid, you’re not only buying space on that results page, but if done correctly (by expanding the word or phrase and using match types fully) you can leverage that winning word 1000:1 or more.

Last Two Days –  Win Free ClickEquations PPC Platform For 1 year — just by following @clickequations on Twitter.

Do It Now!

• There is a free lunch. Monday 3/9 in SF, CA – We’re buying for any of our followers that would like to join us. DM for details.
• ? from my 8/yo: Dad, doesn’t everyone who makes a website *kinda* work for Google?
• DT @ppcmaster: Exposing click fraud – http://tinyurl.com/ar8cg9 #ppc (Thanks for that article from July 2004)
• What do you call ClickFraud Fraud? (Generally I think you call it the anti-ClickFraud industry) 
• New Post: A proposal for next gen #Affiliate Marketing http://bit.ly/enAdW (Or ‘how to get most spam and gunk off the internet’).
• Heading to visit with @avinashkaushik
• Sign up for our new paid search email newsletter – http://is.gd/mTeR
• All morning in ‘sprint’ review and planning, great to see new features and fun to plan what’s coming next.
• Anyone using a ‘first click’ revenue allocation model that could answer some questions?
• RT @avinashkaushik: Am quite proud of Google being Googley & creating innovative privacy controls: http://tr.im/hfQW
• Tagging. Arhrgghrr.
• Adwords back-dates revenue credit to date of most recent PPC click, everyone else (GA Included) assigns to date of conversion. Right?
• Is there a simple way to read tweets of all followers, without following them? (To check ‘em out). Anything allow this?
• Tons of connect.facebook.com referrers on our blog lately, what the heck are these?
• Added a new Ad Group to promote @clickequations twitter account. Search for #ppc and #adwords followers where ever we can find them.
• Demo’s and meetings in NYC today. If Jersey lets me through.
• Google finally upgrades GrandCentral -Yeah! http://urlzen.com/7rm
• Follow @ClickEquations by Sunday to win a free year of ClickEquations PPC Software – up to $240K Value – Details: http://bit.ly/uaAek
• If you have brand keywords mixed in adgroups with non-brand keywords, you’ve got work to do.
• When you’re confident enough to make your brand a campaign negative everywhere except pure brand campaigns, you’re done.
• Google Voice transcription great. Full iPhone app for GV now next wish.
• RT @alter_ego_kma: NYC Agency brood, killer event coming…May 212NYC : “Search Engine Marketing for the TImes” @lieblink moderating.
• Time I spend on reading blogs/RSS has been cut by twitter. I don’t think the signal/noise ratio here is nearly as high. What to do?
• RT @barrybyers: Google video on #Adwords CPC and quality score. http://bit.ly/zSm4j
• New Google Quality Score video is very good – http://bit.ly/fm8g – Especially explaining impact of QS on rank, and CPC. 
• GoogleVoice has new outbound dialing option when you check VM from your cell.
• Listening to PPC Rockstars clickfraud episode. Very good one. Will blog some reactions.
• ClickEquations Client & Trial User Training Webinar today 1pm EST – Register: http://bit.ly/2uSHFV – Learn new editor, bid rules etc.
• RT @digitalalex: Great plugin to use Google Website Optimizer on WordPress sites – http://bit.ly/mb71
• Stewart eviscerates Cramer while exposing how TV Journalists have failed us in everything not Paris Hilton. http://www.hulu.com/watch/62203
• I got a preview of something awesome and new for ClickEquations today – I want to share but shouldn’t yet. Still felt compelled to tweet.