How to Save Up to 50% on Your PPC With Quality Score

    by Larry Kim

    Date

    August 19, 2013 at 2:00 PM

    ppc-budgetIn PPC, there are lots of metrics to track, so it can quickly get confusing and then overwhelming. Marketers often ask me, “What’s the one metric I should optimize for? I just want to know the top one or two levers I can pull to make a difference!"

    In my experience, looking at thousands of Google AdWords accounts and billions in combined spend, there are two metrics that correlate most strongly with success:

    Why You Should Spend Time Optimizing for Quality Score 

    Since Quality Score is really a measure of relevance, it’s a powerful predictor of your success. And it makes total sense -- Google’s main goal is to keep users happy so they keep using Google, and keep clicking results. More relevant ads, campaigns, and landing pages get more clicks; that raises your Quality Scores and -- since Quality Score determines both your ad ranking and what you pay per click -- everybody wins.

    So once you’ve committed to spending more time in your account, what should you spend your time on? I recommend that you focus on optimizing your Quality Scores, which is the metric most likely to lead to higher rankings, more clicks and leads, and lower costs for those actions.

    How much lower? Let’s take a look.

    New Data Shows AdWords Quality Score Can Save You Up to 50% on PPC

    In 2009, Craig Danuloff crunched some numbers to show that a Quality Score of 10 could save you 30% on cost per click, or CPC. (Sadly, I can’t link to the post because the Click Equations blog now redirects to Acquisio.) But that was over four years ago, and I was curious to see if the data had changed.

    To investigate, I did a manual analysis of several hundred new clients that WordStream signed up in the first two months of 2013. What I found is that average impression-weighted Quality Scores have fallen in the past four years. In 2009, a Quality Score of 7 (out of 10) was average. But today’s impression-weighted average Quality Score is just slightly over 5. The distribution looks like this: 

    ppc-qs-1

    Therefore, accounts (or campaigns or ad groups) with average volume-weighted keyword Quality Scores better than 5 can be considered better than average, and are thereby benefiting relative to most advertisers. Accounts with average Quality Scores lower than 5 are below average, and those scores are detrimental to your account. 

    I used this data to re-run the calculations and see how much a Quality Score higher than 5 saves you on CPC compared to the average advertiser. Here’s what I found: 

    ppc-qs-2

    As you can see from the chart, the savings have increased. Some highlights: 

    • A Quality Score of 6 is 200% more valuable than it was four years ago! A Quality Score of 6 was previously below average, and increased your CPC by 16.7%. Now, a Quality Score of 6 decreases your CPC by 16.7%. 
    • A Quality Score of 9 is twice as valuable as it was in 2009, saving you 44.4% compared to 22.2%. 
    • A Quality Score of 10 now saves you a full 50% on CPC. That means if all your keywords had Quality Scores of 10, you’d only be paying half as much as the average advertiser. Pretty crazy, right? 

    And if you’re thinking, “So what? I don’t care about cost per click, all I really care about is cost per acquisition” -- fear not. Quality Score lowers your CPA, too. I did a similar analysis based on CPA and found that high Quality Scores also correlate with lower CPAs:

    ppc-qs-3

    With a Quality Score of 10, you’ll pay 80% less per conversion than an advertiser with an average Quality Score of 5. These savings are mostly driven by lower costs per click. This is why optimizing for Quality Score is such a good use of your time.

    Benchmarking AdWords Quality Score: What Should You Shoot For?

    As I mentioned above, average Quality Scores these days hover around a 5. So anything higher than 5 is going to benefit you, relative to the average AdWords advertiser. That means you should shoot for a bare minimum impression-weighted average Quality Score of 6. However, it’s important to note that higher scores save you more. If you want the full 50% savings, you need the gold standard Quality Score of 10.

    The fastest way to find out your impression-weighted average Quality Score in AdWords is to grade your account using the free AdWords Performance Grader. This tool will do an instant audit of your PPC account across 8 different key performance metrics, including impression-weighted Quality Score.

    Your report will calculate and display your average Quality Score and plot a distribution of the number of impressions happening at each visible Quality Score for the last 90 days, and compare that to a “Recommended Curve” for your business. Here’s an example of what the Quality Score section of the report looks like:

    ppc-qs-4

    If you don’t like what you see (the example account above is well below average), it’s time to start working on improving your scores. Here are three tactics to try: 

    • Use ad extensions. AdWords ad extensions, such as sitelinks, make your ads bigger with more places to click, so they increase CTR at no extra cost.
    • Write better ad text. Test different messaging to find the ad text that speaks to your audience. And use your one allotted exclamation point! 
    • Bid on brand terms. Branded keywords tend to have really high clickthrough and conversion rates, so they bring up the average for your whole account. 

    This is a guest post written by Larry Kim. Larry is the founder and CTO of WordStream, provider of the 20 Minute PPC Work Week and the AdWords Grader. You can follow him on Twitter and Google+.

    Image credit: Philip Taylor PT

                                         

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