Calculating Actual CPC on Google
29th July 2007
|
In speaking with some people not in the Search industry there seems to be a lot of confusion surrounding how the PPC Auction works, and how the “Actual CPC” is calculated. This post should clear everything up. That seems pretty straightforward. So, now let’s get a little more granular in the actual calculations that Google goes thru to determine the Actual CPC. To calculate advertiser A’s Actual CPC (in Scenerio #1), we divide advertisers B “Rank number” by A’s Quality Score, and add 1 cent. Scenerio #1
Ads are ranked by Rank Number. Rank number = ( Max CPC * Quality Score). .65/1.8=.36 the result is the amount that would cause Adverstiser’s A ad to appear in Advertiser’s B’s position. To appear above that position, you simply add 1 cent to that amount. Note: If a keyword has a low quality Score then Google sets a Minimum Bid needed for your keyword to enter the auction. The factors affecting your ad rank are: So, if you ratchet-up your Max CPC, you will increase your Ad Rank. The factors affecting your Quality Score are: Any optimization of these factors has the potential to increase your Quality Score, lower your CPC, and/or increase your Ad’s position in the SERP’s. Here are 10 ways to increase your Quality Score. No related posts. |



















July 30th, 2007 at
That’s a good bit of insighter into CPC and quality score.
Am adding your blog to my blogroll.
July 31st, 2007 at
This is one of the best explanations describing CPC and quality score that I have seen. I hope more people who may be confused about this issue have the opportunity to read this. I think the most important aspect about quality score that is highlighted in this article is the fact that it is in fact possible to directly improve your ad quality score. Increasing your quality score has the potential to positively impact your ad rank due to the quality score’s role as a main factor in determining this ad rank.
November 29th, 2007 at
Great post Shimon…as usual. Thanks for the link too
Looking forward to your analysis on quality score next. Are you going to PubCon?
January 14th, 2008 at
Great post on CPC…!
Nice simple and to the point, thanks
May 5th, 2010 at
Great post and clears things up as I think there’s a lot of confusion in the industry over CPC, and I’ve read articles by SEO’s basically saying that ad position is just determined by an auction, where the highest bidder comes first (i.e. not accounting for quality score).
I think you explained it better than most, and possible a little bit better than Google themselves, lol. Thanks