Category Archives: Ad optimization

How clickthrough rate affects Quality Score in Adwords

Marketers, specially digital marketers, love silver bullet solutions. We love how focusing on improving one aspect of a campaign can help us boost performance and profits. Now, on Adwords, I can’t say there’s a silver bullet that will solve all of our problems, but if there’s anything close to one, that would be improving clickthrough rate. If you have ever read official documentation on Google Adwords, or even if you follow respectable marketing blogs that post about Adwords, you most probably already know that improving clickthrough rate will go a much longer way than simply increasing click volume. Improving CTR will allow you raise quality score, achieve lower cost per clicks (CPCs), increase impression share and improve ad position.

What experts say

Let’s review what some of the most respectable online publications, Adwords experts and Google itself say about the impact of a great clickthrough rate over campaign performance.

“When you achieve high click-thru rates, you can pull your bid prices down, down, down and yet stay at the same position on the page, while your traffic goes up.” – Perry Marshall

“Improving your AdWords click-through rate does more than boost traffic to your site: Improving your CTR means raising yourQuality Score and search engine rankings, and lowering your cost per click and minimum bid.” – Larry Kim

“We know that Quality Score (for both AdWords and Bing Ads) is mostly just a matter of beating the expected click-through rate for a given ad position. Ads that get above average CTRs get higher Quality Scores, and vice versa(…)” – Searchengineland.com

“Google cares a lot about your click-through rate (CTR). The better it is, everything else being equal, the less you’ll pay for each click. Think of it as a thank-you discount for buying in bulk.” – Searchenginewatch.com

“Higher quality ads can often lead to lower CPCs. That means you pay less per click when your ads are higher quality. Higher quality ads lead to higher ad positions, meaning they can show up higher on the page.” – Google Partners Adwords Guide

Difficult to argue with these experts and Google itself!

What data days

So experts know it, Google says it, but show me some data, you might say. Well, here it is:

Source: Wordstream

Source: Wordstream

Using aggregate data from hundreds of Adwords accounts, Wordstream, an Adwords agency and enterprise software company, shows us through this graph proof of the direct relationship between high CTR and Quality score. The higher your click through, the higher your Quality Score.

So why is clickthrough rate so important?

Why does Google care so much about this metric? – you might ask, and the answer is pretty simple: high clickthrough rate is a pretty good indication that users are finding relevant results on Google, it’s generally great for advertisers because they engage a broader audience and it’s great for Google’s business because they are getting the most advertising profit out of a limited volume of search impressions. So high CTRs generally means that Google’s users are happy, that advertisers are happy and that Google is happy.

So there’s one reason why Google rewards high advertisers achieving high CTRs, everyone is happy, but off course, there’s a more technical explanation. A very basic mathematical analysis will allow us to understand why Google can significantly lower your cost per clicks when achieving high CTRs.

If advertiser A is bidding $4 dollars per click for a particular keyword while achieving a CTR of 1% for this keyword, this means Google will receive $4 dollars out of every 100 searches of this keyword (assuming actual CPC is equal to Max CPC).

Now let’s say that on the other hand advertiser B bids half of that, $2 dollars for this keyword, but he achieves a CTR of 3%. This means Google receives $6 dollars for every 100 searches for this keyword (again, assuming actual CPC is equal to Max CPC).

So off course, it’s only logical that Google will want to show advertiser B on top of advertising A. Not only will users and advertisers be happy, but also Google’s business will be much healthier. As a reward for the advertiser, Google will require a much lower Max CPC to this advertiser (yet still making more money than if rewarding higher bidders with higher positions), making sure that the advertiser’s campaign performs well for him, while showing his ad in positions more likely to receive clicks. So again, everyone’s happy. If this still sounds confusing, I strongly suggest you to watch Google’s video on how the Adwords auction works. It will clarify the concepts just mentioned in a much more detailed and graphical manner.

Final thoughts

So there you have it, by now you should have no doubts that focusing on improving your ad quality will have an exceptional effect on your Adwords campaign performance. So what is the best way to improve your CTR? With no doubt split testing your ads is the absolute best way to improve your ad performance continuously. We know split testing can be a bit of a headache, but this is exactly why Adboozter exists. Adboozter simplifies your split testing efforts in such a way that you’ll actually have fun while optimizing ad quality and performance. It’s free to try by the way.