Revisiting the Economics of Quality Score: Why QS Is Up to 200% More Valuable in 2013

Revisiting the Economics of Quality Score: Why QS Is Up to 200% More Valuable in 2013 image economics of quality scoreRevisiting the Economics of Quality Score: Why QS Is Up to 200% More Valuable in 2013

Just over 4 years ago, Craig Danuloff at Click Equations wrote an article called “The Economics of Quality Score” that provided a simple model to determine the value of Google Quality Score in your AdWords account.

We all know the value of Google’s Quality Score in a high-level sense – Quality Score plays an important role in determining your Ad Rank, which is how Google determine the position in which your ad appears, which in turn determines the amount of exposure and clicks your ads will receive.

We also know that Quality Score plays a very important role in determining how much you’re charged per click. A now famous video by Hal Varian, Google’s Chief Economist, helped clarify this point – that your cost per click is calculated using the formula: Ad Rank of the ad below yours / your Quality Score.

Using this information, along with some basic arithmetic, Craig published two tables that illustrated the value of Quality Score at that time, as shown here:

Revisiting the Economics of Quality Score: Why QS Is Up to 200% More Valuable in 2013 image quality score googleRevisiting the Economics of Quality Score: Why QS Is Up to 200% More Valuable in 2013

The tables illustrate:

  1. The average savings and “penalties” experienced with high Quality Scores (8, 9, or 10) or low Quality Scores (6 or below), with 7 taken as a neutral average.
  2. The economic cost or benefit of having your Quality Score move up or down by 1 point.

At this point, it’s important to note that the true Quality Score that Google uses to calculate your CPC isn’t really a whole number between 1 and 10. The Quality Score that is visible to you in your account is a whole number between 1 and 10. Quality Score for calculating CPC is a real number and the scale is non-linear. Furthermore there are other factors involved in calculating CPC’s that aren’t disclosed by Google.

So while the actual numbers in the chart were off, the overall point hopefully remains true – that the positive and negative effects of Quality Score and its impact on CPC are directionally correct, and so these tables serve as a powerful illustration of the value of Quality Score.

What’s the Value of Google Quality Score in 2013?

Much more than it was worth four years ago.

While the overall positive and negative effects of having a good or bad Quality Score remain true today, Quality Score has changed significantly in the last 4 years.

Most significantly, a Quality Score of 7 was set to be the neutral value at the time because QS=7 was the average Quality Score for most keywords back then. As Craig put it:

Note that we set QS=7 as the neutral value because using ClickEquations to review a wide range of accounts we’ve seen that QS=7 appears to be the mean quality score across a very large and diverse set of keywords.

Since then Quality Scores of 7 have become much scarcer and the average Quality Score has fallen.

Here’s a quick snapshot of what the Impression Weighted Average Quality Score looks like in 2013. Note that I’m weighting Keyword Quality Scores by impressions – because different keywords have different search volumes.

I compiled this data by doing a manual analysis of several hundred new clients that WordStream signed up in the first two months of 2013.

Revisiting the Economics of Quality Score: Why QS Is Up to 200% More Valuable in 2013 image google quality scoreRevisiting the Economics of Quality Score: Why QS Is Up to 200% More Valuable in 2013

Based on this manual analysis, I estimate that today’s impression weighted average Quality Score in 2013 is just slightly over 5 (out of a possible 10).

A Quality Score of 5 Is the New 7

Keywords, on an impression-weighted basis, now have an average Quality Score of 5. Therefore, accounts (or campaigns or ad groups) with average volume-weighted keyword Quality Scores better than 5 can be considered better than average, and are thereby benefiting relative to most advertisers. Accounts with average Quality Scores lower than 5 are below average, and those scores are detrimental to your account.

So re-running the calculations, but this time using a Quality Score of 5 as the new mean value for Quality Score (the “base value”), the Economics of Quality Score in 2013 now looks more like this:

Revisiting the Economics of Quality Score: Why QS Is Up to 200% More Valuable in 2013 image google adwords quality scoreRevisiting the Economics of Quality Score: Why QS Is Up to 200% More Valuable in 2013

The #1 take-away here is that as average Quality Score has drifted lower, the “value” of having an above-average Quality Score has increased tremendously.

Also note that on a percentage change basis, the Quality Score “discounts” for above-average QS keywords have increased from 66% to 200% compared to their 2009 values, as illustrated in the preceding table.

For this and other reasons, I’ve often argued that Quality Score is the most important success metric in achieving AdWords success – and this is more true now than ever before.

Note that the marginal savings or cost increases for a 1-point increase or decrease in Quality Score remain unchanged (by definition), but are included in the table for the sake of completeness.

What’s My Average Quality Score? How to Check Your Impression-Weighted Quality Score

Now that I’ve described the value of Quality Score, and how it’s more important now than ever, you might be asking yourself – what’s my Quality Score? There’s two ways to figure it out – an easy way and a hard way. Let’s start with the hard way.

Finding Your Average AdWords Quality Score the Hard Way

To manually figure out your average Quality Score, follow these steps:

  • Log into AdWords.
  • For each Search Campaign, navigate to the Keywords Tab, click on the “columns” button, then add the “Quality Score” attribute, as illustrated below.
  • Export the data into a spreadsheet and calculate your impression weighted average Quality Score by multiplying each keyword Quality Score by the number of impressions accrued to that keyword. Add up this product for all keywords, and then divide by the total number of impressions accrued by those keywords. That’s your impression-weighted quality score for your Account (or campaign, ad group, etc.).

Revisiting the Economics of Quality Score: Why QS Is Up to 200% More Valuable in 2013 image quality score google adwordsRevisiting the Economics of Quality Score: Why QS Is Up to 200% More Valuable in 2013

Finding your Google Quality Score using the AdWords Interface

Finding Your AdWords Quality Score the Easy Way

Another way to quickly visualize your impression-weighted Quality Score distribution is to just grade your account using the AdWords Performance Grader. This free tool will do an instant audit of your PPC account across 8 different key performance metrics, including impression-weighted Quality Score.

The report will calculate and display your average Quality Score and plot a distribution of the number of impressions happening at each visible Quality Score for the last 90 days, and compare that to a “Recommended Curve” for your business. Here’s an example of what the Quality Score section of the report looks like.

Revisiting the Economics of Quality Score: Why QS Is Up to 200% More Valuable in 2013 image google quality score checkerRevisiting the Economics of Quality Score: Why QS Is Up to 200% More Valuable in 2013

Now Is the Time to Improve Your Google Quality Score

Knowing that your Quality Scores may be saving you up to 50%, or costing you up to 400%, should provide strong motivation for everyone to both understand and work to improve your Quality Scores.

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