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2 min read

How Does Ad Rank Affect Your Cost-Per-Click (CPC)?

2/18/20 4:31 PM

Digital advertising isn’t quite as simple as it used to be. In order to establish an effective digital marketing campaign, you’ve got to know a little bit about the various factors that affect how your ad will fare amongst your competitors. Factors such as ad rank and cost-per-click are closely intertwined. To remain competitive online, you’ll need a deeper understanding of how they interact.

What is Ad Rank?

Ad rank refers to the position of your pay-per-click (PPC) ad on a search engine results page (SERP). For example, if your ad shows up third on a Google search results page, then your ad rank for that search is three. Your ad rank depends on a number of factors including your bid amount, the context of the search, and your Quality Score. A high ad rank widens the audience you’ll reach with your products or services.

What is Cost-Per-Click?

Cost-per-click (CPC) is the actual amount that you pay for each click on one of your PPC ads. This is essentially the cost of showing users your ads on search engines.  Ads that are involved in CPC include content that can be interacted with online including text ads, shopping ads, and video ads. 

CPC is determined by dividing the amount of money you spent on the ad by the total clicks your ad gets. When you start a campaign, you submit a maximum CPC bid that details the maximum amount cost-per-click you’re willing to spend.

How do they interact?

The goal of any advertising campaign is to maximize your ad rank (more views) while minimizing your cost-per-click. Your ad rank equals your Quality Score multiplied by your maximum CPC bid. Your maximum CPC bid is the maximum bid you specify for your keyword, while your Quality Score is determined by factors such as your click-through rate (CTR), landing page content, and the relevance of your ad copy.

Understanding Quality Score

A high Quality Score is the key to achieving a high ad rank and lowering your actual cost-per-click.  If your Quality Score is high, then your ads will rank higher at a lower cost-per-click. However, if your Quality Score is low, you’ll need to bid a much higher cost-per-click in order to achieve a higher ad rank.

The easiest way to improve your Quality Score is by improving your click-through rate. This is the biggest variable in determining your Quality Score, and thus improving your ad rank and lowering your CPC.  Add plenty of negative keywords (words or phrases you do not want to rank for) to your paid search strategy and use compelling text to create relevant and interesting ads that will boost your click-through rate.

You want your ad to appear as high as it possibly can in search results pages without breaking the bank. If you blow out your maximum CPC bid in order to achieve a high ad rank, then you’re likely minimizing the return on your advertising investment. Raise your ad rank by improving your Quality Score and you’ll watch your cost-per-click go down as your campaign results improve exponentially.


Written by GSM

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