[Search Engine Marketing] 03. Ad Rank and Maximum CPC Bid

Let's learn about ad rank and quality score in Google Adwords.

1. AD Rank

• Ad Placement = CPC BID x Quality Score
• Ad quality and relevance matters
• Quality Score and Ad Rank

2. Quality Score
- QS determined by

1. Expected click-through rate(CTR)
2. Landing page experience
3. Ad Relevance
4. Ad Formats

Max CPC

• Your conversion rate
• The unique value of one visit to your site: how much each new conversion is worth on average
• Customer Lifetime Value(CLV) / Average Order Value(AOV)

3. Your profit margin

• ROAS(Return on Advertising Spend) = Total Conversion Value / Total Cost of Advertising
• Value of one visit = Conversion Rate * Average Money Spend by a Customer (conversion value/ AOL)
• Profit Margin = (Revenue - Cost of Goods Sold) / Revenue
• Calculate Max CPC Bid = Profit Margin * Unique Value of One Visit to Your Website