One of the most common misconceptions people have about using Google to advertise their business is the idea that the amount you’re willing to spend per click is the only metric for appearing on the first page, and that the more you bid, the higher you rank. While this was true in the very early days of Search Engine Marketing, Google’s focus on relevance changed that in the early 2000s.
Nowadays, the most important aspect of your ad is the perceived relevance to the searcher. The way Google determines this is through an internal Ad Rank, a metric made up of 2 things: Quality Score and Bid. The quality score is a function of Ad Relevance, Landing Page Experience and Click-through Rate. What does this mean for advertisers? Here is an example that would best demonstrate this:
You run an e-commerce store that sells men’s tennis shoes. You set up an ad using Phrase Match keyword type and bid on “tennis shoes men.” Your maximum bid is $5.00. Your Quality score is Above Average (9/10) as your Ad Text, Landing Page and Click-through Rate are all strong.
A competitor of yours sells women’s high heels. They are a huge, multinational corporation with no care at all for proper digital strategy, they just want their ad to show. They bid on Phrase Match “shoes” and have a maximum bid of $30.00 per click.
What Happens When Someone Searches “Tennis Shoes Men”?
Both keywords would trigger when that search happens, as your bid on “tennis shoes men” and your competitor’s bid on “shoes” fits the search terms. Who wins? A lot of people assume that the person with the higher bid would get the first spot. However, the opposite is true! Your competitor’s ad actually doesn’t show at all. Their Ad Rank is too low and they get a warning in their Google Ads Campaign Manager that looks like this:
How does this make sense for Google? Wouldn’t it be better for them to take the higher bid and earn more per click? The answer is simple – since Google only makes money when someone clicks the advertisement, the more relevant the ad to the searcher, the more likely they will click on it. The more likely someone is to click on an ad, the more Google makes from each individual search.
Think about it: if someone is searching for “men’s tennis shoes,” its highly unlikely that someone advertising women’s heels is going to get clicks. And even if they do click the ad, the chance they’re actually going to buy something (and thereby satisfy the advertiser and keep them running ads on Google) is slim.
While this may be an extreme example that would rarely, if ever, actually happen, Quality Score is equally as (if not more) important as Bid Amount. The only time bids will come into play is if 2 ads have identical Quality Scores.
By focusing on your ads relevance to the keywords you’re bidding on, both in the ad text and the landing page, you ensure your ads appear to the most relevant searches, as well as reducing your costs and increasing the chance of a conversion!