Friday, March 13, 2009

AdWords AD Auctions, How They Work?

When I think of an auction, be it a charity auction or land auction or ebay auctions, first thing comes to my mind is the highest bid. If I really wants the goods being auctioned, the best will be the highest bid and I will have to beat the rest of bidders in their high bids.
But I learned today that at the AdWords auctions the system works a little differently. The winner only pays the minimum amount necessary to maintain their position on the page. That means you'll only pay the minimum necessary to beat the person below you. In fact, our quality-based pricing system ensures that you'll often pay less than your maximum bid.
So your prize of the Ad could easily be less than your highest bid!
Confused? Me too, until I watched this video. (Or watch in HD)

Google blog Introduction to the ad auction Also available at inside Adwords Blog
Sphere: Related Content


Dan PPCPROZ said...

Do you think the pie chart of Quality score is accurate?

* 60% CTR (“user feedback”)
* 30% Adwords Account Architecture (“relevancy”)
* 10% Landing Page Factors (that’s all? -WTF)
* Assuming Hal’s pie chart is accurate…

Landing Page Factors (only 10%) includes: relevancy of landing page, original content, easy navigation, transparent ie. privacy policy page, load time, contact us page, little use of pop ups/unders, and more? Relevancy of the landing page is only one of many components of the landing page formula, did you catch that? We don’t know exactly how much power this carries, but my guess is 30-50%.

If that is true…

Landing page relevancy influence over overall Quality Score accounts for only 5% of Quality Score?!

That can’t be, can it? Google prides itself on Relevancy so, how can this possibly be I ask you? I hope I’m wrong on this.

ravenII said...

Man you blew a pipe :) now I need to check it all over again.
Math does not do justice. Perhaps an email or a comment to original poster might shed some light.
Thank you for being sharp and noticing this.