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Thursday, 9 August 2007

Step By Step Calculation For Top Ad Placement

Earlier today the Inside AdWords blog announced an upcoming change to the top ad placement formula. The new formula uses a keywords Maximum CPC rather than average CPC to calculate whether or not the ad will get placed above the organic search results.

The way the placement / bid process will now be worked out is as follows:
  1. Calculate Quality Score using CTR, ad quality, relevance
  2. Retrieve advertiser's Max CPC for the keyword
  3. Is the Max CPC higher than Top Placement threshold?
    • Yes: Eligible for placement above organic results
    • No: Not eligible. Ad will be placed only on right
  4. Calculate Ad Score = Quality Score * Max CPC
  5. Determine ad placement by comparing with other advertisers' Ad Scores
  6. Is ad position within Top 3?
    • Yes: Is ad eligible for placement above organic results?
      • Yes: Place in one of the 3 positions above organic results
      • No: Place ad in the right-hand column
    • No: Place ad as per normal method