How does the bidding system work?
The price you pay per click algorithm is:
Your Price = The Ad Rank of the person below you / your quality score + $0.01
In Google Ads, Quality Score is very important. 10/10 is the best; 1/10 is bad.
Google tracks on the back-end and creates a QS based on Landing Page Experience (are they taking actions and finding what they are looking for). Ad relevance is extremely important. High relevance is created by crafting the ad that people are looking for.
Expected CTR is also very important. Google only makes money when people click. Your Expected CTR increases with relevance. The more people click, the more you succeed, and the more Google succeeds.
Ad Rank determines how high you show up on the search.
Ad Rank is a formula:
Ad Rank = Max Bid * Quality Score
The takeaway is that the best placement (top) is the cheapest placement because Google rewards good, relevant advertising.
To have the best relevance, you want the best:
In a future blog post, we’ll go into more detail on how to improve each of your Quality Score metrics.
Hope this helps!