How does quality score affect ecommerce advertisers?

Developing a strong pay-per-click campaign takes time and efforts (in equal measures). You just cannot launch one and sit with your feet up and forget about it. And one of the most important factor in paid search is Quality Score. Just to get back to the roots, Quality Score measures the relevancy between your keywords, ads, landing pages and consumer search queries. Since Google pays a lot of importance to user experince, Quality score does the same.

Keywords costs and return on ad spend (ROAS) are two things that are important to any ecommerce advertiser. Quality score is directly propotional to ROAS and inversely propotional to the click costs. Which means, higher the Quality score higher will be the ROAS and click costs will eventually decrease. On the other hand, lesser the Quality score less will be the ROAS and click costs will increase. Let us make it clearer.

VALUE EACH CLICK:
Lead generation clients and ecommerce advertisers behave differently in one way. The former is more focused on lead volumn and overall CPA goal whereas the latter focusses on pays more attention to CPA goal of each product. Since keywords attracts the most number of target, it is essential to focus on them if you are an ecommerce advertiser.

How does it work:
Start by analyzing your keywords. Then calculate your revenue per click by dividing your PPC revenue by the total number of clicks on the same timeframe. Then, furthur divide RPC result by your goal ROAS. This will give it the highest bid you need to make to maintain a good ROAS. This helps you in determing how your CPC bids should work. See the example below to understand better:

Relationship between click costs, ad position and quality score
According to Google, your ad rank is the product of your maximum CPC bid and Quality score. Look at the example below


Here, Quality score is the influencer if keyword bid is kept constant. This means that higher the Quality score higher will be the ad position.

Take it a step ahead by comparing the ad rank with your competitors. Compare the click costs of two advertisers in the same ad auction with different Quality Scores. Look at the example below:


You can see that advertiser A with low Quality score of 2 has to bid more to get the ad rank of 5. Whereas, advertiser B has the Quality score of 8 and has to bid comparatively low for the same ad rank. How does this affect the overall ROAS? Let us see:

So if we keep all other values constant and only change the click costs, the advertiser with low Quality score will have a lower overall ROAS. In this case, advertiser’s A’s overall ROAS suffered as a result of more expensive click costs, originating from poor Quality Scores.

IN A NUTSHELL
This is how Quality score is essential for ecommerce advertisers. A good Quality score will not only up your performance on the search engines but also help you in maintaining your desired budget without overshooting it. Tell us how have you used Quality score to optimize your own ecommerce campaigns? Feel free to leave a comment below.