How Google will rank the ads with the new system?

September 4, 2005

By: AdWordsAdvisor

It just cross my mind that if the minimum cpc is different for the same keyword for diffenrent advertisers, how google will rank the ads.
For example, me and another advertiser are both targeting the same keyword. Before the algo update I was no.1 with max cpc of 0.10. Then the minimum cpc for that advertiser is raised to 0.50, what will happen? He/she will be placed before me? If this is the case, it’s obviously not fair for me because I have to pay more to get my position back. It’s like I get punished for other people’s mistakes. The result is Google will eventually drive the cpc up for all advertisers.

Or maybe the ranking factor remains the same even if the minimum cpc has been raised. I haven’t done any experiment with it. Can anybody share some ideas on this?

minimum CPC is related to whether a keyword will run or not (in other words, minimum CPC is a key component of a system that replaces the old system of disabling keywords, slowing accounts, and so forth). However one’s minimum CPC is not related to ranking.

To summarize that briefly: minimum CPC determines whether an ad runs for a particular keyword or not, but does not influence position.

Under the new quality-based minimum bid system, ads are ranked in the very same way they have always been, and one’s minimum CPC does not enter into the algo. Excerpting from the AdWords Help Center:

Keyword-targeted ads are ranked on search results and content pages based on their maximum cost-per-click (CPC) and Quality Score. (For the top positions above Google search results, we use the actual CPC.) The Quality Score is determined by the keyword’s clickthrough rate (CTR), relevance of ad text, historical keyword performance, and other relevancy factors.

Ad Rank = CPC X Quality Score

Quoted from:

How are ads ranked?
https://adwords.google.com/support/bin/answer.py?answer=6111

I hope this helps to clarify.
AWA