How Ad Rank Is Calculated in Google Ads

This article will look at how ad rank is calculated in Google ads and how you can use this to improve your campaigns.

So what is ad rank? Ad rank is the way that google determines where your ad will be displayed in each individually search made on Google.

Every time somebody searches on Google an auction is held to decide where each ad will be displayed. This happens automatically and in a split second. The auction takes into account a number of factors that determine where your ad will appear in the results and how much you will pay for the click.

The simplest way to look at ad rank is your ads quality score multiplied by your max CPC bid.

For example if you have a quality score of 6 and your bid is £2 your ad rank would be 12. What this means is that somebody with a higher quality score and a lower bid could potentially outrank you in the auction.

Example of How Ad Rank is Calculated

• Advertiser 1 – Has a max CPC bid of £2.00 and their quality score is 6. Ad rank in this situation is 12
• Advertiser 2 – Has a max CPC bid of £1.30 and their quality score is 10. Ad rank in this situation is 13

In this example, the second advertiser is bidding considerably less for their max CPC. However, due to a strong quality score, they would win the auction and be shown in a higher position.

The actual cost per click you pay will be determined by another formula based on the ad rank of the advertiser below you in the auction.

The formula used is –  The ad rank of the person below you divided by your quality score plus £0.01.

In our example this would mean that advertiser 2 would pay £1.21 per click in this auction (12/10)+0.01=1.21.

This is demonstrated even better in the image below from the guys over at Wordstream.

As you can see in this image Google rewards quality. How your ad rank is calculated means that having the highest bid, will not necessarily mean you are in the highest position.

Additional Factors That Determine Ad Rank

As I mentioned previously, the above example is a simplified way of looking at how Ad Rank is calculated. There are actually a few other factors that go into how your ad rank is decided. According to Google there are actually 5 main factors.

1. Your bid – This is the maximum cost per click you are willing to pay. Advertisers will usually end up paying less than the max CPC. You are simply telling Google, this is the absolute maximum you are willing to pay.
2. Quality score – This is determined by 3 main factors.. Your click through rate, your ad quality and you’re landing page experience.
3. Ad rank thresholds – These are thresholds that Google use to maintain a minimum level of quality for any given ad position. You can read Googles own definition of ad rank threshold here
4. The context of the person’s search – This takes into account a number of factors including. The users search term, their location, the time of the search, what device they are using. As well as other signals and attributes
5. Expected impact of extensions and ad formats – This means that Google will look at the types of ad extensions you are using and they will determine how useful these are to the person searching. The will also look at the ad format you are using (for example call only ads or expanded text ads). Google will use this information to determine how different extensions and ad formats will affect your ads performance.

Conclusion

There are a number of factors that determine how ad rank is calculated. Your bid is obviously the easiest way to impact ad rank. However, improving your overall ad quality can have the biggest impact.

By working on your quality score, you can improve the user experience and Google will reward you for this. This will usually result in ads appearing in better positions and you paying less for each click.

Things that you can do to make your ad the preferred choice in the auction, include:

• Testing lots of different ads – make sure you test lots of ads and try to improve your relevance and click through rate, also by giving Google more choice, it is far more likely that one of your ads will match the context of a person’s search.
• Make sure to use all relevant ad extensions. Google will not show all of your extensions, all of the time but if they are available for a specific ad, this can also help with more choice to make your ad relevant to the search being performed.

We hope you have found this article on how ad rank is calculated useful and if you have any questions, we would love to hear them in the comments below. Also, if you would like more tips on improving quality score You can learn more about quality score and how you can improve it here