Quality Score's Affect On CPC

[DWeiss]

How exactly does the Google quality score determine the CPC I pay? If I have the highest quality score I am placed in the #1 position, yet I could still have a lower max CPC than the advertiser with the 2nd highest quality score, so how is my actual CPC determined? Could anyone give an example?

[PPCGuy]

Quality Score = (keyword's CTR, ad text relevance, keyword relevance, landing page relevance)*

*Where the interactions between the Quality Score variables change as Google continues to refine how to measure and define quality in AdWords.

[Toure]

Ad Rank = CPC X QS

So for example -

Max CPC 50p & QS of 5 = Ad rank of 2.5
Max CPC 1.10 & QS of 2 = Ad rank of 2.2

Obviously the top one with 2.5 would rank higher than the 2.2...

Actual CPC = Ad rank of below advertiser / Your Quality Score + 0.1p

The actual cost per click calculation is determined by the ad rank of the advertiser directly below you, divided by your own Quality Score + 1p.

So in the isolated example above...

2.2 / 5 = 0.44 +1p = 45p a click actual cpc.

[DWeiss]

Thank You. I've heard that MSN uses a comparable formula. Does anyone know if this is true? And also, that Yahoo will be using this sort of formula. Does anyone know when?

[abbottsys]

Originally Posted by DWeiss

Thank You. I've heard that MSN uses a comparable formula. Does anyone know if this is true? And also, that Yahoo will be using this sort of formula. Does anyone know when?

I just got a note from Yahoo saying they are moving to yield ranking (as opposed to their current straight bid ranking) very soon, early Feb I think.

[PPC]

MSN does and Yahoo will starting on Feb. 5.