Bidding & Ranking

Advertisers need to determine the maximum they are willing to pay for a click on their advertisement, and they need to decide this for each keyword they enter for an advertisement. This bid is the maximum CPC (cost per click), or max CPC, that the advertiser is willing to pay for the click.

Every time a search query is entered (for example, in Google), the search engine runs an auction to determine the placement of the advertisements where advertisers have bid on that search term. This auction is known as a generalized second price (GSP) auction. In the GSP auction, each advertiser will pay the bid of the advertiser below him, plus a standard increment (typically $0.01), for a click on the advertisement. In other words, the advertiser who “wins” pays one cent more than the second highest bid.

Say three advertisers, GREEN, ORANGE, and BLUE, bid $2.50, $3.00, and $2.35, respectively, on the same keyword. The search engine has set a minimum price of $2.05 on that same keyword.

The table below shows how the advertisements would be positioned and what they would each pay for a click.

Quality Score

When it comes to ranking, of course, it’s not quite as simplistic as that. As well as the bid an advertiser places on a keyword, the search engine will take a number of other factors into account. In the case of Google, this is known as Quality Score.

The Quality Score is determined by the following, among other factors:

• The relevance of the keyword to the search term
• The relevance of the advertisement copy to the search term
• The relevance of the landing page to the search term
• The historic click-through rate (CTR) of that advertisement

Search engines look at factors such as relevancy to try to ensure that it is not just having deep pockets that can land advertisers the top spot. Search engines need to ensure that users find the advertisements relevant, otherwise they’ll be less likely to click on them—and no click means no revenue for the search engine.

Understanding Ad Rank

Landing Pages

Paid search advertising is not just about creating advertisements and bidding for keywords. The process continues once a user has clicked on your advertisement. The page that the user reaches by clicking on an advertisement is called a landing page.

Landing pages can make or break an advertising campaign. Poorly executed paid search campaigns will send all users to the home page of a web site. Campaigns that convert will make sure that users land on a page that is relevant to their search. The aim is to keep the user as focused on the goal—conversion—as possible. Sending the user to the home page gives them too many other options to choose from.

For example, if someone searched for “Canon EOS 450D,” a poorly run campaign would send that user to http://www.canon.co.uk. A better campaign would have the user clicking through to http://www.canon.co.uk/For_Home/Product_Finder/Cameras/Digital_SLR/EOS_450D/index.asp.

Landing pages also indicate relevance to the search engine, which can increase the Quality Score of the advertisement, and in turn lower the CPC (cost per click) of the keyword. Adding pages to the web site that are keyword rich can also carry SEO (search engine optimization) benefits.

Paid search campaigns often have thousands of keywords, which can mean that there will be a lot of landing pages to be built! Creating dynamic landing pages means that with a simple script, unique keyword-rich landing pages can be created for every search. The script will take the keyword that the searcher has used, and insert it in predefined places on the landing page. The user will then be landing on a page that is highly relevant to their search!

Dynamic landing pages can be created with a simple script that will allow for a landing page to be created for every keyword in the paid search campaign.