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Ad Rank, Ad Position & Avg Position!

Explorer ✭ ✭ ☆
# 1
Explorer ✭ ✭ ☆

Hi Guys

 

Please bear with me in this confusion which I always had about the 3 metrics as mentioned in the Subject. I wish you guys could share your insights and help me develop an understanding on the same.

 

My first question among many to come.

 

Google says that whenever a keyword is eligible to trigger an ad it enters the ad auction, in that auction the "ad rank" is calculated which is the simple multiplication of the "max CPC" and the "QS". Now suppose I am an advertiser for which the calculated QS in an ad auction comes out to "6" and my Max CPC is "400(Indian Rupees)". As per the ad rank formula my ad rank would be 6*400=2400.

 

There is another advertiser bidding on the same keyword having a QS of "7" and a Max CPC of "6$" and thus the ad rank comes out be 7*6=42.

 

The first which comes to my mind is that in this case which would be a higher ad rank according to which the ads would be positioned on the SERP?? The avg dollar to rupee comvresion is 1$=50 Indian Rupees

 

I also came across a google help article which took an example of max CPC as 0.5$ and QS of "30" in calcualting the "ad rank which came out to be "1.5" ! Now we always read the QS can go only go up to "10",to confirm the same I called google and came to know that what happens at the back end of the process is quite different from what is displayed in the form of metrics in the adwords account!

 

If you guys could clear this might be "naive" confusion of mine to start with.

 

Thanks

Mudit

 

 

 

 

 

 

 

4 Expert replyverified_user

Re: AdWords Exchange rate:

[ Edited ]
Top Contributor
# 2
Top Contributor

 Hello Mudit;

Don't worry; We are in a global world, and AdWords does not differentiate on a currency basis :Smiley Happy


  • "When converting currencies, we receive a daily feed from Citibank and use the average of the buy and sell prices to determine the exchange rate. Because this calculation is so granular, there is no advantage to bidding in one currency rather than another. Google does not share exact exchange rate information because it fluctuates on a daily basis."

 

As for your second question : This is an erratum. QS is 1 to 10. I am not quite sure, but I saw long ago, a similar case to the one you brought (of QS 30), in a non-English help center article, that was written years ago, and hadn't been updated. I was told that, in the early days, indeed, QS was on a 100 point scale. But, I have no confirmation on that.

 

-Moshe

Moshe, AdWords Top Contributor , Twitter | Linkedin | Community Profile | Ad-Globe
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Re: Ad Rank, Ad Position & Avg Position!

[ Edited ]
Top Contributor
# 3
Top Contributor

Hi Mudit,

 

I would like to refer you a thorough video by Google Chief Economist Hal Varian where he has very neatly explained how ad rank is calculated. I am sure once you go though this video, you will not have any confusion regarding how your ad rank is calculated. Still, if there would be any, Adwords Community will be more than happy to assist you Smiley Happy

 

Pankaj

Re: AdWords Exchange rate:

Explorer ✭ ✭ ☆
# 4
Explorer ✭ ✭ ☆

Thanks Moshe for you feed back.

 

The article which has the QS of "30" taken as an example is this. If you go down this page under the heading " keywords within multiple ad groups are similar to search query " you will find a drop down sub heading named as " use the keyword that has the highest ad rank". You can see that there is an example which has the QS of 30 used to calculate the ad rank!

 

Coming back to my main concern about the ad rank calculation. I read that to calculate the ad rank all bids are converted to US Dollars according to the exchange rates provided by citibank and that all bids are converted to micro currencies and thus the calcualtion becomes real granular.

 

Now,is there a max limit till which ad rank could go?? Coz if an ad has a rank of 3 and another ad has an ad rank of 4,obviously the second ad would be placed higher on the gooogle SERP,and the ad rank being a multiplication of QS and Max CPC could result in any number, big or small. So, while calcuating it in the auction is there any limit till which the ad ranks are constrained to??

 

Looking forward to it.

 

Cheers

Mudit

 

+Mudit

Re: AdWords Exchange rate:

Top Contributor
# 5
Top Contributor

Hi Mudit,

 

I didn't find the reference to '30' exactly where you mentioned but I did find it on that page, which has got to be old information:

 

"There is a cheaper keyword with a higher Quality Score and Ad Rank

On rare occasions, the system will prefer to use a keyword that is cheaper (i.e., it has a lower actual CPC), has a higher Quality Score, and has a higher Ad Rank. Here's an example:

    Query: plumber tool
    Keyword from ad group 1: plumber tools (maximum CPC bid = $0.10, Quality Score = 30, Ad Rank = 3.0)
    Keyword from ad group 2: plumber tool (maximum CPC bid = $0.15, Quality Score = 4, Ad Rank = 0.6)"

 

I can't confirm the details of the Ad rank calculations, this is only based on what we have available.  Using simple math on the Ad rank question, I think it was estimated the other day that max CPC is somewhere in the vicinity of $1000.00 USD.  So if Max QS is 10 and Max CPC is $1000.00 that would lead me to believe that the cap on Ad Rank at 10,000. 

 

Not sure if this answers the question or not...just thought I'd chime in.

 

-Tom

 

Tommy Sands, AdWords Top Contributor | Community Profile | Twitter | Philly Marketing Labs
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Re: Ad Rank Max value

[ Edited ]
Top Contributor
# 6
Top Contributor

Mudit;

Rball answered yesterday, that the max bid could go as $100 - the highest, so the max ad rank would be 10*100= 1000. (If a keyword gets a QS=10 and the max bid is set for $100)

 

As far as the QS link you gave: This is an erratum. As said, QS goes in the range of 1 to 10.

 

-Moshe

Moshe, AdWords Top Contributor , Twitter | Linkedin | Community Profile | Ad-Globe
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Re: AdWords Exchange rate:

Explorer ✭ ✭ ☆
# 7
Explorer ✭ ✭ ☆

Hi Tom & thanks for you feed back.

 

Moshe,I guess it was Tom & not Rball who came to some kinda max CPC limit with his experiment which came around to be somewhere in the proximity of 1000$Smiley Happy

 

Anyways,its always fun and nice to read about such findings. I am just going to call the google rep and brainstorm more about it. Will keep you guys informed about what he has to say.

 

Cheers

Mudit

Re: AdWords Exchange rate:

Explorer ✭ ✭ ☆
# 8
Explorer ✭ ✭ ☆

Ok, just done with a conversation with the google adwords rep and as expected I am waiting for his reply via mail in the coming week,though he sure looked quite baffled with whatever we are discussing here!

 

I asked him about the cap on the campaign budget and the Max CPC and all he came out with was, that the max CPC can't be higher than the campaign budget(which we all know). I still asked him to let me know about the same taking by default that the budget is higher than whatever highest possible max CPC we can set in a campaign.

 

Also, I did an experiment in one of my paused campaign by increasing the budget to an impractical figure of "5000000000000000"(Indian rupees) and when I tried saving it, I received an error message with a completely different figure of (13 digits) offered to set instead! I don't know the reason why the figure I entered was not accepted as my new campaign budget.

 

Moving forward, here is a blog by google's chief economist Hal Varain. Now,all is clear till the point that in an auction the ad ranks are calculated for each eligible advertiser and according to that the positions on the page are decided. I always thought that the "avg position" metric is the average of positions which an ad secures on the google SERP courtesy its calculated ad rank each time in an auction.

 

Hal Varain in the blog explains otherwise! He says that the avg position metric is courtesy the "auction position(ad rank)" and not on the "page position". I read this blog yesterday and could not sleep the whole night thinking about what was lost in translation! The google rep too was not much sure about the statements he made and asked for some time to figure out how right Hal is.

 

Also in another video by him he explains the actual bid price which an advertiser pays is the minimum amount to beat the ad below him and not his set Max CPC,all clear. But in the example he simply says that an ad above a certain ad, only pays the Max CPC of the ad which is below. Cumon,I know that there are "n" number of factors associated with the auction and the actual price one pays,but it just can't be the exact Max CPC of the advertiser below you,atleast certain decimals more in cost!!

 

Waiting for your insights!

 

Thanks

 

Re: AdRank

Top Contributor
# 9
Top Contributor

Mudit;

 

First, you need to sleep well at night ....We are talking advertising...Bad things do not come out of it (a long as you follow the Policy...) so sleep well....Smiley Happy

 

I am just now reading Tom's answer. Though, we both posted at the same minute, I haven't read it until now. The $100 I quoted was a number given yesterday by Rball. Tom and I, both of us, quoted Rball. Tom just missed one zero...:smileyhappy Rball has been on this community since 2006, and I take his numbers to be accurate.

 

 

As to Hal Varian blog and video : the video is quite an old one, and is only intended to demonstrate the principle that price an advertiser pays is the minimum required to beat the competitor. As you know, the actual calculation of the price you pay,  is your competitor's ad rank divided by your QS + 1 cent.

 

The blog is excellent: It is well-known that an average is a statistical parameter that can be misleading....Smiley Wink

 

-Moshe

Moshe, AdWords Top Contributor , Twitter | Linkedin | Community Profile | Ad-Globe
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Re: AdRank

Explorer ✭ ✭ ☆
# 10
Explorer ✭ ✭ ☆

Hi Moshe

 

Indeed the "1 cent" was missing in the video exampleSmiley Happy though I understand it was just a simple illustrative video.

 

I checked in my account also,the max CPC value anyone could use lies in the proximity of the 1000$ figure. Moshe, any insights on the statement in the blog which says that the avg poition is relative to the "auction postion(ad rank)" and not on the "page position"??

 

Thanks

Mudit