Quality Score Systems

A PPC engine based on Quality Scores is more complex but makes more sense for the provider. Google came up with the concept of the quality score. It doesn't measure only how much an advertiser is bidding on a keyword but how much revenue an advertiser is generating for their business.

The extra variable they include to create the "Quality Score" is called the Click Through Rate - abbreviated as "CTR". The Click through rate is the percentage measurement of how many clicks an advertisement gets per 100 views - also called impressions. So If you ad is shown 100 times and 3 people click on it to go to your website then that ad has a CTR of 3%.

Here is the genius of the quality score method. If advertiser A bids $1.00 on "LCD TV" and get a 1% conversion rate then they're generating $1.00 of revenue per 100 clicks for Google. But if advertiser B, who is only bidding $0.11 per click, gets a 10% CTR for their ad then they're generating $1.11 per 100 clicks for Google. Google decides to place advertiser B in a more favorable position because they're generating more revenue for Google.