As many of you know I’m not really a PPC (pay per click) guy… definitely focused a lot more on how to get Organic Traffic (since it’s free and all). BUT, over the last few months I’ve been messing around quite a bit with PPC advertising again. And while I can’t say I’m a PPC expert by any means, I’m finally getting a pretty good handle on how it all works and am profiting well with my campaigns.
I’ll save some of my experiences in a future post, but I wanted to share with you a video I came across recently on how Google views their PPC formula by Google’s own Chief Economist, Hal Varian. It is totally worth the 10 minutes to watch it (in my opinion).
Check it out:
So here’s a quick summary of the video:
The Google “Auction” is remarkably similar to the old Overture engine (now Yahoo Search Marketing) in that you only pay as much as the max 2nd bid (in theory). But of course, with Google there’s such a thing as…
Quality Score
Quality Score takes into account the following:
- CTR
- Landing Page Quality
- Relevance
Hal Varian then goes on to explain how Google determines your Ad Rank, which uses a formula like this:
Bid x QS = Ad Rank
Multiply it together to get ad rank… pretty simple really.
Then he explains how you figure your CPC (cost per click). In other words, how much you pay compared to the next guy… I won’t try to explain the formula here (see 5:29 into the video for the explanation).
In all, I think it’s a great introduction as to how it all works (and it should be… “they” created it).
To your success,
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Great video, thanks for sharing :)
Great video on google adwords.
The video was worth the ten minutes to watch. Helps those of us who are beginners.-Nate
simply nice thanks for sharing