The Hidden Cost of the Adwords Quality Score

Google recently introduced the Adwords Quality Score to improve the experience for Google's users... and perhaps their shareholders as well.

For those who are unfamiliar with the term "Adwords Quality Score", essentially it is an algorithm which is applied to ads and keywords on Adwords which measures the relevance of the landing site to the keywords chosen & the ad itself... Yes, it's the site & not just the landing page. A-B Testing different domain names with the same ad & basic landing page content has confirmed this well enough to convince me.

Shortly after the Quality Score was introduced, Google added a tool to allow advertisers to see their quality score measured as Poor, Good, or Great. It's nice to have a little transparency. But with only 3 ratings, the key word here is little.

Unsurprisingly, our (good) sites which have always had good ad placement & a proven history of higher than average click-through rates showed a quality score of "great" for most keywords. Some longtail keywords fell into the "good" category. Some of the thin affiliate sites will need some work.

To give an example of financial services sites, our keyword minimum bids are running from .01 to .10 cents. Anyone in this niche knows that Google will gladly set minimum bids as high as $5 to $10 in this category if G doesn't like the site for whatever reason.

Ok, so we survived the Adwords Quality Score rating. But many didn't. Their options include dropping they keyword, raising the quality of the page to match some mysterious criteria in the quality score algorithm, or raise their bids.

Now, Adwords positions (and cost per click) are determined by a few main factors... click through rate, maximum bid, & now quality score. For more competitive niches, the end result of implementing a Quality Score is that many advertisers who wish to continue advertising for a keyword with a poor quality score will have to raise their bids. As they raise their bids, it will affect the cost to maintain a position for even those with a high quality score because the cost per click is determined by both bid & click through rate relative to other ads for the keyword.

Consider what that means in a niche that has thousands of advertisers across a gazillion keyword phrases.

Higher bids in reaction to the Quality Score, will drive up the average cost per click for even those advertisers with a high quality score.

I should have loaded up on GOOG at the $86 IPO.