Top Secret Way to Save 50% or More on Your AdWords Bill

top secret

Do you advertise on Google AdWords? If so, did you know that there’s a top secret way to save 50% or more on your monthly Adwords cost if you create awesome ad campaigns? Alternatively, did you know that you might be paying up to a 400% surcharge on your AdWords cost if your ads stink?

How does this work? It has to do with an ingenious yet also somewhat confusing billing system that Google AdWords employs when calculating the Cost Per Click (CPC) when a user clicks on one of your search ads.

In AdWords, advertisers specify a maximum CPC, which is the most you’re willing to pay if a user clicks on your ad. But your maximum CPC is not the same thing as your actual CPC, which is always less. Exactly how much less depends on your secret AdWords discount (or surcharge).

Top Secret Way to Save 50% or More on AdWords Cost

Understanding Your Quality Score in AdWords

Quality Score is Google’s method of rewarding advertisers that have high quality ads and well structured campaigns, and also penalizing advertisers with lousy ad campaigns.

Google assigns a “Quality Score” between 1 and 10 to each of your keywords. It’s a grade for your keywords and ads that is calculated based mostly on the Click Through Rate (CTR) of your keywords and ads.

Relevance

The reason for this is relevance. Google wants to serve up relevant ads that help its users, because then they’ll be more likely to keep using Google, as well as to click those ads (which puts more money in Google’s pockets). If users are clicking on your ad more often, then there’s a good chance that your ad is relevant to those searches. If users aren’t clicking on your ad that often, then your ad probably just isn’t that relevant to the user’s search.

To Summarize

Google wants to incentivize and reward advertisers to write high quality, relevant ads and pick specific, relevant keywords that earn high Click Through Rates and thus High Quality Scores. The higher your Quality Score, the higher your secret AdWords discount.

But how much you ask?

The Typical Quality Score Distribution

Recently, I did a survey of the average impression-weighted Quality Scores across the accounts of several hundred WordStream clients acquired in 2013. Here’s a summary of what I found:

quality-score-distribution

As you can see, Google grades all keywords on a curve.  Some keywords get a score of 10/10, but others get just 3/10 or 4/10. But on average, the typical keyword Quality Score is 5/10.

This means that having an above average Quality Score of greater than 5/10 results in a “discount,” and having a below average Quality Score of below 5/10 results in a surcharge.

Below are the benefits of having high Quality Score. As you can see in the following table, having a Quality Score of 10 affords you an estimated 50% discount:

adwords-discount-table

Alternatively, a Quality Score of 6/10 means you save approximately 16.7% on your Cost Per Click (CPC). Furthermore, having a below average Quality Score of 2/10 means your CPC’s are actually increased by approximately 150% relative to the average CPC.

The key to getting your big discount is by having a higher Quality Score, which means doing stuff to ensure higher Click Through Rates (CTR) on your ads, such as writing great ads, using negative keywords, being picky in choosing your keywords, leveraging ad extensions and so on.

It’s also worth noting that in the last 4 years, Google has become a “tougher grader.” Meaning the average Quality Score grade used to be 7/10 and now it’s just 5/10. This means that a high Quality Score is worth much more than it was four years ago, in that it will result in a substantially higher discount.

Are Your Quality Scores Helping or Hurting Your AdWords Cost?

This new data illustrates just how crucial good Quality Scores are to your AdWords ROI (Return on Investment), since they can save you up to 50% on each click. So where do your Quality Scores fall in the grand scheme?

I suggest using the AdWords Grader to check your impression weighted Quality Score distribution. This free tool shows you what your Quality Scores look like across your account and where the curve should be for better cost efficiency, as shown here:

quality-score-graph

In this case, the advertiser has an average Quality Score of just 3.8/10, which is below the average score of 5/10. According to the preceding Discount / Surcharge Table,  they’re stuck paying the AdWords surcharge of between 25% and 67%.

Are you receiving the top secret AdWords Quality Score discount – or are you paying a surcharge on your Adwords cost?

Top Secret Photo via Shutterstock

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Larry Kim


Larry Kim Larry Kim founded WordStream in 2007. He serves as company CTO and is the author of 4 Award-Winning Books on Software Development. Larry also blogs at the WordStream Blog and practices photography in his spare time.

10 Reactions

  1. Great data to accompany your post Larry. However, have you seen certain industries where the average QS is much lower than 5?

  2. A wealth of information filled with neat tricks. Thanks for sharing this with us.

    Ti

    • Larry Kim

      ha ha well it’s certainly not very easy to follow in the adwords system. for example, it doesn’t say: “you are paying a 200% adwords tax”, etc.

  3. Excellent post! It really has encouraged me to look more frequently at where where the money is going. Culling under-performing keywords and adding some more negative keywords can really help in building a high quality score.

  4. Maybe not a secret, but still a very nice outline and explanation of the Adwords quality score.

    Thanks for that!
    Patrick

  5. I’m kinda an old dog trying to learn new tricks… Thanks for the insight and I like the Amen!!!

  6. Good post to showing the situation but quality score is one of the fundamental features that too many ignore – its not a secret at all, its just something non-experts overlook (unfortunately).

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