Impressions, Clicks, and CPC

Why your ad gets shown, why it gets clicked, and how much it costs

You do not need experts to understand this. As ambitious as the title of this section sounds, anyone using SEM can understand why and where their ad appears on the Google SERP and how much they have to pay for a click on it.

And, the trouble is, if you don't understand this, you will not be able to manage your campaigns effectively or improve performance. So it is quite important that you have some solid understanding of why your ad does or does not appear and why it costs what it does to get a click.

We're going to use some simplifications

Let's be clear that we are talking about the forces that affect your outcomes. The actual algorithms that decide things like ad placement and click cost are not going to be covered here. We are going to use some simplifications. But not to the point of diluting what is important: helping you to understand what you have to do to get ads that are clicked on and understanding how much that click will cost you.

The actual algorithms at work here are truly difficult to grasp. Just to give you a couple ideas of how insanely complex these algorithms in fact are:

• Your own Google Ads accounts might contain 12 different campaigns that trip the same Google search. Even describing how Google would go about determining which one of your own campaigns would "win", would require a fairly long book.
• Or, imagine a series of competing ads, all of which perform well on Google and all of which generate some fairly high conversion rates. Again, trying to describe how Google would go about determining which ads to show in which order would require a long book.
• And lastly, consider how complex the algorithms would have to be for Google to determine how to rank new campaigns against the solid performers that have established some history? A long book, indeed.

It starts off with the relevance of your campaign to the actual search

Imagine a series of transparent slides where Google overlays the search that was performed, your keywords, your ad, and your landing page to see how much commonality they have. If they all match quite well, you have achieved relevance.

If there were seven words in the Google search, and you only matched on the keywords "blue jeans", you have relevance. Very Little Relevance. If those seven words were: "Bellonica Marble Blue Jeans Size 14 In-Stock", and your campaign matches all seven, you have relevance. Very High Relevance.

So. Google will consider your highly relevant campaign for "ad placement". Now what.

Click Through Rate (CTR) of your ad/extensions

Well, simplistically put, Google will show the ad that makes them the most money. Now you might think that's the ad with the highest bid. NOT SO FAST!

Google needs to factor in which ads have a probability of actually getting clicked on. Think of CTR as the probability that somebody will click on your ad. In other words, if Google shows your ad 400 times, how many times will that ad generate a click (that actually generates revenue for them)? Google is simply not going to give that ad position to you, unless it has a pretty good CTR and bid.

If that probability (your CTR) is very low, it wouldn't matter how much you bid or how relevant you are: Google will not show your ad. Why? Because there's no probability they will make any money off showing that ad. They'd be better off favoring an ad that actually got clicks. Even if it has less relevance and lower bids.

Now the tricky part of that thought process is that you are trying new ads all the time. How does Google go about ranking ads with no CTR history against those with significant history? The answer is: Better than you might expect. Google actually does a very good job of giving new ads and campaigns a chance to compete against established ones. Enough that we always recommend the following: Keep trying new things to find out what works best.

How much will that click cost?

Campaign has to be relevant. Ad has to be good click through rate. Bid has to be competitive. And you will be shown in a good spot on the SERP.

If your CTR is high and your relevance is higher than competing ads, you should be able to get clicks for pretty reasonable bids. But you are in an auction for those valuable ad spots on a Google search engine results page (SERP).

And that means that a lot of the per click cost will come down to how competitive your marketplace is for particular search terms. Fortunately for you, you are very good at using specific sets of words that reflect people with buying intent in your marketplace. So you only get impressions from real potential buyers. And you don't pay anywhere near as much as those competitors of yours who use more generalized keywords and campaigns.

Trouble is: Conversions are the real challenge

There's only one problem with all of that: it's a great way to get clicks. Clicks cost money. And you are trying to get conversions. Cheaply. With fewer clicks.

So, while it is quite important that you understand these forces determining which ads will show for which searches and how much you will pay for a particular click, the real challenge is to do it while focusing on conversions. And that is the subject of another section.

You need a landing page and a process for dealing with those paid clicks that gets you value from every possible click.