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Recently, AdRank has introduced its new ad ranking formula, which is even more advanced than before, and of course producing more results to the advertisers. And if you’re running ads via Google Ads (formerly, Google Adwords) then no doubt that you’re going to increase the ROI from the advertisement. We all are well aware of AdRank and what value does it hold in the marketing campaign to rank the ads so that it appears on the top, and you get most of the results.

From the very first day of public access to Google Ads many of the advertisers have gained more than expected growth from the Pay-Per-Click (PPC) campaigns. Google has certain algorithms that help and changes the ranking of an ad. But have no worries, we’ll discuss the new ad rank formula and other factors that will help you generate more returns.

For people who’re new to digital marketing, Google Ads (also Google AdWords) is an advertising platform by Google where people (advertisers) bid on some keywords (related to their business/service). Then their ads appear on Google’s search results.

You might be wondering that if I bid higher, my ads will appear on the top, but the bitter truth is, it is not how you’re thinking. Suppose if you and your competitor both are targeting the same keywords, who you think come on the top? The one who pays more? No.

If you’re running an ad on Google Ads, then the position of your ad may differ based on your ad rank. If your ad has got the highest ad rank, then your ad will be on the top position. But how ad rank calculation is done?

The visibility of your ad is entirely dependent upon the ad rank. Google ad rank formula follows a basic calculation:

Ad Rank = CPC Bid x Quality Score

The formula listed above is the old one, the new method to enhance the rank of the ads is furthermore optimized and advanced to bring more results by giving scope to advertisers to display more information in their ads for better engagement and clicks.

Google has recently announced it’s new ad ranking formula that can be used to calculate the ranking of the ads.

Ad Rank = CPC Bid x Quality Score x Ad Extensions & Formats

You must be wondering about why the update was needed? Well, that’s because, with the more advanced formula, it becomes easier for advertisers to better the experience of their audience by providing more optimal and required details. It helps to increase the rate of engagement. Meanwhile, it also helps to better the CPC as the required details could be found within the ads, hence brings more potential clicks.

Before we move further, let’s understand about both of the concepts, i.e., CPC Bid and Quality Score.

1: Cost-Per-Click (CPC)

CPC bidding simply means the amount you will pay for every click that is made on your ads. It has a panel to set a maximum cost-per-click bid, that means you’re telling the maximum amount you’re willing to pay for every click you get on your ads.

If you create an ad campaign, you’ll get a keyword research tool, which gives about some estimated amount of bid that you should go to bring your ad on the top of the results page. Most of the time it works, whereas in some instances it goes off. The best thing you can do is, putting the bid amount a bid higher than the estimated one. Once you start your ad campaign, based on the performance, you can reduce your CPC. In case you find the performance going down, you can again increase the CPC bid. It helps to optimize ad campaigns with better results.

CPC and Max CPC are two different things, CPC simply means the amount you’re paying to Google for every click that is made. Whereas for Max CPC, it means that it is the maximum amount you’ll pay for any click that’s done. Means, you won’t be charged more than your max CPC.

2: Quality Score

As the name suggests, it is entirely related to the quality, the better the score you get, the better your ads get treated. There is a countless number of ads created every day, as per the Google AdWords ad ranking formula, the quality is a must, and for that further categorization is done. It goes like:

  1. Relevancy of an Ad
  2. Relevancy of the Page
  3. Click-Through-Rate.

Furthermore, for every category, the sub-category goes like:

  1. Below Average
  2. Average
  3. Above Average

No doubt that everyone wants better quality score, so it is suggested that your ad must have quality score average or above average, it should never be below average. As if you go with below-average quality scores, then the ad rank will reduce, hence more CPC bids, this is an overall failure of the whole ad campaign.

Some of the good practices to enhance the Ad Relevance for better quality score are:

Make sure your ad contains your keyword, as it gets highlighted, and the audience will get a better notice on it.

Likewise, putting a keyword in the headline is also recommended, as it represents an ad as a complete solution to the user.

Also, you can and should put keywords in the URLs for better performance.

Now for Landing Page Relevance, you must focus on its content, keywords on the page, better navigation, and ease of transparency.

If your ad is related to Laptops, then the ad click should bring them to the landing page that has keywords and information related to Laptops. Don’t make it too confusing for users to understand the structure of the page. Try to put relevant keywords so that the audience gets better to reach to the section they’re looking for.

Last but not least, Click-Through-Rate (CTR) is also responsible for enhancing the quality score of an ad. CTR is a metric to find the rate of “how successful the advertisement has gone.” It is calculated as the ratio of clicks and impressions. In short, the number of clicks your ad has received to the percentage of people who saw your ad (impression).

The mathematical formula goes like:

(Total Clicks on Ad)/(Total Impressions) = Click-Through-Rate

You can get better CTR by raising the CPC bid, but that does not always work (as we’ve already discussed.) Now if you put negative keywords, it will result in relevant searches, that means higher chances of getting clicks, which itself leads to better CTR rate.

If the ad text is further enhanced with relevant data, it boosts the click-through-rate and ad relevance. It is seen in some instances that people usually over-bid with an expectation that their ad will be on the top. But this is not the case; your money will go to waste if you try to bid without enhancement in the ad rank formula results.

If the ad position is on the top 3, the chances of getting clicks increases, whereas for other locations (right-hand side) have fewer chances of getting clicks.

If you’re bidding with low-quality ad scores, you’ll be heavily penalized from AdWords. Likewise, if you’ve got higher quality scores, then you’ll get lower CPC.

3: Ad Extensions & Formats

To better the experience and growth of the advertisers, Google has enabled the functionality to use ad extensions. Ad extensions provide additional information in the advertisement; hence, the more chances of getting user clicks.

Based on the needs and requirements, advertisers use ad extensions to enhance the delivery of their ads further so that they get potential clicks. As with ad extensions, additional and informative content can be included in the ad, which itself results in better relevancy of the ad.

Let’s know a bit of some ad extensions:

Location

With this extension, you can give the address of your company, store, or business, along with that you can also provide the opening and closing hours, it makes the ad more informative to the audience. It is beneficial when you want to target a local audience or users for your business or service.

Sitelinks

These are some additional links that you can give in your ad format. It simply means that if you want to share some relevant sections of your website, then you can use this extension to send the audience to the respective page. For desktops, you can give 6 site links, whereas for mobile you can give only 4.

Call

As the name suggests, with call extension, you can provide the phone number of your business so that anyone interested in your service/advertisement can directly get in touch with you via a phone call. It is easier for the audience seeing your ads on mobile, as it becomes easier to call directly.

App

It allows advertisers to embed a button to download their application. It has the thumbnail icon (as app icon), name, and a customized CTA button. This extension is beneficial if you’ve got mobile applications (Android & iOS) as you can include tracking codes to find out the app conversions.

Callout

You can assume callout extensions same as site links, the only difference is, the text is not clickable. With callouts, you can provide additional textual information in the ad format; this helps to deliver some USPs to the audience, hence more chances of potential clicks from the targeted audience. With this, you can put some offers, limited offers, and other high resulting terms.

The primary and foremost concern for adding the extension was to bring the most impacting ads in the view. As suppose if two advertisers are targeting the same keywords, quality, and bid, then whom do you think should come on the top? To sort this, a new and advanced module was added to enhance the ad ranking further. With this new ad ranking formula, the most prominent and better ad will come on the top. The advertiser has multiple options to put and use extensions, once they do so they increase the user experience with the ads and hence; as a result, more potential clicks are generated.

This latest Google’s ad rank formula will help to reduce the CPC with better results. The reason is if you’re getting more space to put additional information and actions on the ads, then the chances of getting a potential click increases. These extensions represent more information about the brand or business, so the user gets a complete view of what they’ve been looking for.

The more clicks you get, the more Click-Through-Rate is achieved, which helps to reduce the Cost-Per-Click. Hence, going with this new ad rank formula will give you three benefits at the same time, the first is you’ll get potential clicks, next you can provide more details of the company/business, and you get lower CPC with the improved ranking.

Conclusion

So these were some ad extensions that you can put on your ads, though there are multiple extensions which we will be talking later in other articles. But for now, if you’re going with ad campaigns, you should take the benefits of these extensions to grow the ROI of your campaigns.

Now if you’re running an ad on Google AdWords, you must be well aware of how quality score and ad rank are calculated. You can enhance the ad rank of your advertisement so that you get better results and benefits from the PPC ad campaign. Meanwhile, you can calculate ad rank from the above formula. Make sure that you’re optimizing and analyzing every ad campaign with all the factors. Relevancy and keywords are two primary things that you should put on the top.

New Google Adwords Ad Rank Formula - How it works?