Understanding Google Adwords Ranking

Google Adwords ranking system is secret and it is not revealed to advertisers. In fact, the process is quite complicated and would be very difficult to predict, even for Google. This is because PPC advertisers keep bidding on ad places at different amounts and that is not even the sole criteria of ranking.

It would be hard to break down the exact analysis of Google Adword ranking, but small advertisers need to be aware of two most important aspects that determine the ranking of your ad within Google Adsense:

• Maximum Cost Per Click (CPC)
  
• Click Through Rate (CTR)

Maximum CPC

Important note: The ranking depends on the maximum CPC and not the actual CPC.

The maximum CPC is what will be the maximum value of a click on your ad. Naturally, if you are able to provide a higher maximum CPC, Google or in fact any other PPC ad publisher will view it favorably. Thus if the maximum CPC is $1 for an ad, it will receive preference over another competing ad with a maximum CPC of $0.50.

There is a real danger that due to this advertisers provide a higher maximum CPC than they should. This will cause a lot of problems with the marketing campaign even though you will retain the top spots in advertising. This is a case of the famous winner's curse that I will discuss in detail in another post. Suffice for now to say that you should not go beyond your maximum CPC simply to get a higher ad spot at Google - it is not good for business. Your optimal strategy is the bid the maximum CPC that you determine for your business.

Click Through Rate (CTR)

This is another very important parameter often neglected by advertisers. Google strives hard to provide relevant ads to their customers. Therefore in a particular keyword, if you are able to catch eyeballs and make people click on your ad even though you are not at the top, Google will review this favorably. This is because it shows that your ad is more relevant to the visitors than the top placed ad, and thus Google will work to get your ad ahead.

CTR can get tricky and is hugely complex. I will provide detailed posts in the future about how to scientifically improve your CTR for the ads. The bottom line is to remember that you should make your ad attractive to the visitors. You should make your ad stand out, even in the limited space given to you. This will greatly help your Google Adwords ranking.

Review: In this post, we discussed about how PPC advertisers like Google Adwords determine their rankings. Google Adwords ranking is very important for any advertising campaign and it is primarily influenced by the maximum CPC and CTR.