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Marketing on Google
Marketing on Google
Marketing on Google
Marketing on Google
Marketing on Google
Marketing on Google
Marketing on Google
Marketing on Google
Marketing on Google
Marketing on Google
Marketing on Google
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Marketing on Google

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How Google Ranks Advertisers

How Google Ranks Advertisers

Published in: Business, Technology, Design
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Transcript

  • 1. Marketing onGoogle
    How Google Ranks Advertisers
    davidgracia.com
  • 2. Ecosystem of Three Players
    • Advertisers want to show their adds to the right users
    Google
    • Users want to get information relevant to their search queries
    Advertiser
    User
    • Google wants users to find what they search so that they click and keep coming
    Contextually relevant advertising
  • 3. Maximum Bid
    • Lets suppose there are 4 advertisers and only 3 add placements for a given “keyword” or “search phrase”
    Max Bid
    Advertiser 1
    $ 4.00
    • Every time a user types a search term an auction among the possible advertisers is run
    Advertiser 2
    $ 3.00
    Advertiser 3
    $ 2.00
    • Every advertiser is willing to pay a different price or cost per click for a given keyword: this is the maximum bid
    Advertiser 4
    $ 1.00
    Is price the only criterion for add ranking?
  • 4. Two Criteria for Add Ranking
    • If the advertisers’ willingness to pay were the only factor considered, there could be non relevant adds in the top positions
    Price:
    CPC
    • If users perceive the adds do not match with their search queries they won’t click and won’t keep using Google
    Quality Score
    • Google ranks advertisers according to 2 factors: price and quality
    What determines the quality of the advertiser?
  • 5. The Quality Score
    • CTR: each click is interpreted as a vote for a webpage or advertiser
    Landing Page
    • Relevancy: match between the content of an advertiser’s webpage and the user search query
    Relevancy
    • Landing Page Quality: relevant and original content, easy to navegate, quick load times, etc.
    How does the Quality Score influence the add ranking?
  • 6. Price and Quality
    • Thus, each advertiser has a willingness to pay (maximum bid) and a quality score
    Max Bid
    Quality Score
    Advertiser 1
    $ 4.00
    1
    • The Add Ranking depends on a combination of both factors
    Advertiser 2
    $ 3.00
    3
    Advertiser 3
    $ 2.00
    6
    • To keep it simple let’s suppose the add ranking is just the multiplication of both factors
    Advertiser 4
    $ 1.00
    8
    How does the Quality Score influence the add ranking?
  • 7. Ad Rank
    Max Bid
    Quality Score
    Ad Rank
    =
    Position
    X
    Advertiser 1
    $ 4.00
    1
    4
    X
    Advertiser 2
    $ 3.00
    3
    9
    2
    Advertiser 3
    $ 2.00
    6
    12
    1
    Advertiser 4
    $ 1.00
    8
    8
    3
    What is the actual CPC the advertiser needs to pay?
  • 8. Determining Cost Per Click
    • Even though advertisers set a maximum bid for a given keyword …
    P1
    Q1
    X
    P2
    Q2
    X
    =
    • … it does not necessary mean they will end up paying that much
    P1
    P2
    Q2
    X
    =
    Q1
    /
    • Each advertiser pays just the minimum price necessary to beat their competitors
  • Actual Cost Per Click
    Max Bid
    Quality Score
    Ad Rank
    =
    Actual Cost
    X
    Advertiser 3
    $ 2.00
    6
    12
    (9/6) = $ 1.5
    1
    2
    Advertiser 2
    $ 3.00
    3
    9
    (8/3) = $ 2.7
    Advertiser 4
    $ 1.00
    8
    8
    (4/8) = $ 0.5
    3
    Advertiser 1
    $ 4.00
    1
    4
    X
    Why is quality so important?
  • 9. The Value of Quality
    Max Bid
    Quality Score
    Ad Rank
    =
    Actual Cost
    X
    Advertiser 3
    $ 2.00
    6
    12
    (9/6) = $ 1.5
    1
    Advertiser 3
    $ 2.00
    8
    16
    (9/8) = $ 1.1
    1
    2
    Advertiser 2
    $ 3.00
    3
    9
    (8/3) = $ 2.7
    Advertiser 4
    $ 1.00
    8
    8
    (4/8) = $ 0.5
    3
    Higher quality score implies lower cost per click
  • 10. Summing Up
    • Users receive relevant adds and information
    Google
    • Advertisers show their adds to relevant users and get better results
    Advertiser
    User
    • Google meets the needs of both users and advertisers and they keep using the system
    Contextually relevant advertising

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