We’ve all seen ads in our Google search results, ads which are served through the Google Ads platform. The way Google determines the order in which to show those ads is by using a formula that it calls Ad Rank.
What Is Ad Rank?
Ad Rank essentially refers to the position an ad holds in SERPs (Search Engine Results Pages). Google defines it as “a value that’s used to determine where ads are shown on a page relative to other ads, and whether your ads will show at all.”
This means that if an ad is located in the first position on the page, its rank is one. If it’s in the second position, its rank is two, and so on. What actually impacts an ad’s rank, though? Let’s go back in time for a bit and get some context.
Prior to 2017, an ad’s rank was a somewhat simple calculation which involved max cost-per-click (CPC) and the number of competitors relative to a particular search. Since then, however, Google’s made some major changes to how ad rank is calculated, based on thresholds and machine learning. This brings us to today, when calculating ad rank is much more complex than it used to be.
In a nutshell, ad rank is calculated based on:
- the bid amount
- ad quality at auction time
- an auction’s competitiveness
- user signals and attributes
- search context
- extensions and other ad formats’ expected impact
Every keyword search is analyzed and based on the above factors it’s given an ad rank. This means that every search that is performed on Google is different. You could have a rank of one in one search auction and a rank of three in the next.
To get a clearer understanding of how ad rank works, let’s look at each of the factors above.
Bid Amount
This refers to the amount of money you are willing to pay to show up higher in search results for specific keywords. There are minimum and maximum thresholds, so for example if your maximum CPC is $2 and the next highest bidder’s is $1.70, you’d be paying $1.71 in that auction.
Keep in mind that things are quite that simple, however. There is no globally recommended bid amount that works well for everyone. The right bid will depend on your campaign type, how much your keywords cost, and how successful they are.
When starting out with Google Ads, most people pay for each click on their ads using CPC bidding. This allows them to set a maximum CPC bid which represents the most you’re willing to pay for a click on your ad. Consider how much a click is worth to you when setting your bid, and if you’re not sure, try starting with a maximum CPC bid of $1.
When you’ve created a new campaign and you’re setting a max CPC bid, remember that it’s applied to every keyword you choose for your ad group. The ad group default bid can be changed at any time. If some keywords are more relevant than others, you can set different bids for them and increase the chances of your ad showing up when people search using those keywords. These are called keyword bids.
Ad Quality
Ad quality is essentially an estimate of your users’ experience when they see your search ads. It is determined by three main factors: expected clickthrough rate (CTR), your ad’s relevance, and the landing page experience. The higher your ad quality, the better your performance, including lower costs and better ad positions.
Your ad quality can affect:
- whether your ad appears in SERPs
- where it appears in SERPs
- whether any extensions appear
- your CPC
- your ad performance
Ad quality isn’t impacted by:
- bidding
- account structure
- frequency of ads
- conversions reported
To get an idea of your ad quality, you can use Google’s Quality Score tool. This tool provides insight into whether you should focus your efforts on improving ad relevance, clickthrough rate, or your landing page experience.
Here are the instructions from Google on how to check your Quality Score:
- Sign into your Google Ads account.
- In the left menu, select Keywords.
- In the upper right corner of the table, click the columns icon A picture of the Google Ads columns icon.
- Under “Modify columns for keywords”, open the Quality Score section. To view the current Quality Score and its component statuses, choose any of the following to add to your statistics table:
- Quality Score
- Landing Page Exp.
- CTR
- Ad Relevance
- To view past Quality Score stats for the reporting period you’re looking at, choose any of the following metrics:
- Quality Score (hist.)
- Landing Page Exper. (hist.)
- Ad Relevance (hist.)
- CTR. (hist.)
- Click Apply.
Auction Competitiveness
Your ad rank may vary based on auctions for related, similar searches. For example, because “wedding invites” and “wedding invitations” are so similar, they could be informed by each other.
Additionally, if there are two ads competing for the same position, the one with the higher ad rank will win out. Keep in mind, however, that this may also mean a higher CPC.
User Signals and Attributes
These signals include things like time of day, location, and device type. These factors will influence ad rank thresholds.
Search Context
The same keywords could be searched by two different users and have completely different contexts.
Extensions and Other Ad Formats’ Expected Impact
Google will consider your ad extensions for relevancy, clickthrough rate, and overall experience with your ad.
Extensions essentially expand ads with additional information, making them more enticing for people to click on them and choose your business over others. Extension formats can include location information, call buttons, additional text, links to specific pages on the site, and more.
The extensions that show up in SERPs depend on which ones Google thinks are more relevant to each search. That’s why you should use all the extensions that are relevant to your business.
Extensions also give ads more visibility and often see more clickthroughs that ads without any extensions. This means extensions add more value to your ads without costing you more money.
There are two types of extensions: manual and automated extensions. You have to put a bit more work into setting up manual extensions, while automated ones are automatically added when Google thinks they will improve your ads’ performance. Automated extensions don’t require any setup so you won’t see them when setting up your manual extensions.
Keep in mind that just adding extensions doesn’t guarantee that they’ll always show up in SERPs. They do appear when Google thinks they’ll improve your ad’s performance and when your ads’ positions are high enough for the extensions to show – there is, unfortunately, a minimum ad rank above which extensions appear.
Final Thoughts
Because Google Ads more or less functions like an auction, there’s a misconception that if you just bid higher, you’ll also rank higher. However, it’s not that simple – not anymore, at least. If your ads aren’t as good, a competitor could still bid less than you and still outrank you.
While there are numerous differences between paid and organic searches, they fundamentally function similarly, in that Google will still favor information that is relevant to the searcher.
