All Hail Quality Score – King Of The AdWords KPIs!

YouTube Preview Image The high-level relationship between Cost-Per-Click and Quality Score is well known: the higher your Quality Score, the lower your cost per click.

Earlier this year, I published some research data showing how, as average Quality Scores have drifted lower over the years, the cost-per-click savings associated with above-average Quality Score keywords is today worth up to 200% more than it was just 4 years ago!

Here’s a quick summary of the relationship between Quality Score and Cost-Per-Click in 2013:

cpc vs quality score adwords

Based on this data, it would seem obvious that we should all be trying to optimize our Quality Scores. Right?

It’s The CPA, Stupid!

Not so fast. Quality Score detractors are quick to point out that it’s the cost-per-acquisition (CPA) and not cost-per-click (CPC) that matters.

And they’ve got a point there.  Ultimately, PPC really is all about the cost of customer acquisition. If you can acquire customers profitably at a lower CPA, who the heck cares if your CPC is high or if Google says your keyword’s Quality Score is 2/10? Duh!

But is optimizing for CPA really any different from optimizing for Quality Score? Or does optimizing for Quality Score result in both lower average CPCs and CPAs?

Understanding The Relationship Between Cost Per Conversion & Quality Score

For my article this week, I wanted to quantify the relationship between the average cost per conversion and Quality Score. To do this, I manually compiled CPA data from thousands of campaigns across several hundred of my client accounts, representing about $100 million in annualized spend.

I then plotted the average cost-per-conversion of each campaign vs. the impression weighted Quality Score for that campaign. Here’s what that looks like:

the relationship between cost per conversion (CPA) vs. quality score in adwords

Based on my analysis, I confidently conclude that there is indeed a very strong relationship between average cost per conversion and average Quality Score.

In other words, the higher your Quality Score, the lower your CPA will be on average. Therefore, optimizing for Quality Score and CPA are essentially the same thing. Here’s the data in a table form:

impact of quality score on cost per acquisition

The preceding table illustrates the kinds of discounts (or penalties) you can expect to see on your average CPA based on your Quality Score for a given keyword, relative to the average Quality Score of 5/10 these days.

In a nutshell, for every Quality Score point above the average 5/10 score, your CPA will drop by 16% on average. Conversely, for every Quality Score point below the average of 5/10, your CPA will rise by 16%.

A few months back, Michael Wiegand at Portent did a similar study and found that for each point that your QS goes up, there was an average CPA reduction of 22%. The main difference is that my study is compiled using about 100x more data.

It’s also worth pointing out that I didn’t find a big difference in average conversion rates vs. Quality Scores. I found that high Quality Score keywords converted only very slightly better than low Quality Score keywords, meaning that the huge reductions in CPA were being primarily driven by the CPC savings (or increased click costs) — which are a direct result of your Quality Score.

A Note About Averages & Lazy PPC Marketers

With so much evidence pointing to a strong relationship between CPA and Quality Score, why do many SEMs choose not to optimize accounts for Quality Score – or basically just click-through rate – which is essentially the same thing? I can think of at least two reasons.

First, it’s important to note that when working with averages, you’ll always have values that are either above or below that average. Thus, it’s completely possible to look in any one account and find cases where lower Quality Score keywords have lower CPAs than higher Quality Score keywords. In these cases, it most certainly makes sense to optimize for CPA.

However, as you look at more and more keywords and spend across hundreds or thousands of accounts, you’ll find that the find that on average, the higher your Quality Score is, the lower your CPA will be.

Another thing that I see happening here is just old-fashioned complacency and laziness. The sad reality is that while most AdWords managers claim to be super proactively managing client accounts, not very much is actually being done. It’s far easier to dismiss Quality Score as being irrelevant than it is to actually do all of the hard work that is necessary to improve your click-through rates and Quality Scores.

Other Miscellaneous Survey Methodology Notes

Just a few final points about my data collection methods:

  • Yes, I included branded terms in the study
  • Yes, branded terms on average have higher Quality Scores and Lower CPA’s
  • No, the removal of branded terms didn’t fundamentally alter the relationship between CPA and Quality Score
  • Yes I’ve lumped together companies in every imaginable industry
  • When I slice the data by industry, the relationship between CPA and Quality Score still held

Summary: All Hail Quality Score, King Of The AdWords Realm!

Image courtesy HBO

In my article today, I hope I’ve put to rest the debate over the importance of optimizing an account for Quality Score, because it has such a huge impact on both CPA and CPC.

And if Quality Score is king of the AdWords realm, then the Hand of the King is account activity – it’s only through thoughtful and ongoing PPC optimization work that we’re able to realize improvements in CTR and Quality Score.

Let me know what you think about all this stuff in the comments below!

Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.

Related Topics: Channel: SEM | Google: AdWords | Paid Search Column

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About The Author: is founder and CTO of WordStream, provider of the AdWords Grader and 20 Minute PPC Work Week.

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  • Steve Cameron

    Great article.

    QS is the “holistic” benchmark for campaigns – it is a reflection of the keywords, ad copy and landing pages – it’s hard to affect QS by focusing on only one of these.

    But – whilst optimizing for higher QS is sensible, the truth is that optimizing for a better user experience and, in particular, higher relevance, will affect QS positively in any case, and these are, perhaps goals of a higher order.

    At the end of the day Google has never really wavered from the relevance mantra – and QS is their way of guiding us back to the straight and narrow by effectively punishing us for straying.

  • Larry Kim

    hey thanks for this note. i can publish this data in a follow up article. the challenge is mostly just time as opposed to some nefarious plot. believe it or not it is really hard to exclude brand campaigns from the analysis since that’s a super manual task in determining which keywords are the brand terms, then manually excluding them. i’m not a full time columnist here (i actually have a day-job running a company lol). I filed this story at like 3AM in the morning today.

    At a minimum i thought you’d appreciate the fact that i didn’t base my conclusions off of looking at 1 account or something like that. There are thousands of campaigns in that analysis representing a boatload of spend. I haven’t seen anything like that yet. When you look at so many accounts, you get some companies that do brand keywords, others that don’t.

  • Larry Kim

    thanks steve.

  • tedives

    I suspect a lot of what’s in the data is, late-funnel terms are the ones with higher CTRs, and the client campaigns are perhaps organized somewhat according to the funnel (or at least brand/nonbrand). So late-funnel terms/campaigns will have a high CTR and QS, and will convert great, and will cost less.

    There’s no way to really turn an early funnel term into a late funnel
    term, that’s just sort of how the cards fall.

    You can certainly get your CTR up by writing a better ad, and that’s a worthy effort – but you run the risk of bringing in viewers that won’t convert if you worry about CTR/QS overly.

    In fact, a creative can be thought of as a valuable filter to, rather than *maximize* valuable clicks, to *minimize* non-valuable ones. I think the industry tends to focus a bit much on maximizing rather than this valuable screening function.

    Taken to the extreme for illustration sake…if you sell lawnmowers and your creative has a .5% CTR, and you change your creative to have the title “Britney Spears Lawnmower” just to get more clicks, and you get a 4% CTR, and your QS shoots up…you’re clearly worse off, not better off; those clickers are very much less likely to be buyers.

    Sometimes a low CTR, and low QS, is exactly what you need, to separate the wheat from the chaff!

  • Martin Röttgerding

    Hey Larry,

    Cool post! Still, even though there is a correlation between visible quality score and CPC, I don’t think it’s a good KPI. It can tell you a few things if put in context, but in the end quality score (especially _visible_ quality score) is just a byproduct and not a goal.

    Regarding the connection to CPA, I think that’s a step to far. CPA is CPC times conversion rate. CPC is connected to quality score, but conversion rate is not. If your quality score goes up, your CPC’s might fall, but it won’t make people buy from you. That’s basically the difference between AdWords’ ‘optimize for clicks’ (aimed at improving CTR and therefore QS) and ‘optimize for conversions’ (aimed at improving the product of CTR x conversion rate and therefore CPA).

    Ummm, and I’m not so sure about this king of the realm analogy. How do wildlings, the undead and dragons factor into that? Winter is coming …

  • Martin Röttgerding

    This makes sense, but there’s another side to filtering clicks.

    If we assume that QS is basically CTR then the ad auction is just AdRank = MaxCPC x CTR. If CTR doubles, we can cut CPC in half, meaning we get twice the clicks for half the price, meaning we get twice the clicks for the same money.

    Now with the Britney Spears Lawnmower: Lets say you could get eight times the visitors (by increasing CTR from 0.5% to 4%) at the same cost as before. Then if those visitors would still include the valuable traffic from before, plus some less qualified traffic, this would be a great bargain. You would get the additional traffic for free.

    That’s the downside of pre-qualifying your traffic. In a pay per click world this seems to make sense, but AdRank is actually about what you pay per impression.

  • tedives

    Great point….CTR relative to others as I’m sure you mean… unfortunately it’s hard to know the competition’s CTR and what the curve will look like.

    Might be interesting to take into account the system-wide CTR in these sorts of analyses as well somehow, i.e. turning CTR into a relative CTR, I think that’s been available now in Adwords for some time, right, as it had been in Bing previously.

    Good clarification Martin!

  • Ryan Bruss

    How did you calculate campaign quality score? Did you limit this to only exact match keywords? If you did not, then your numbers won’t be correct. Broad and Phrase match keyword quality scores do not represent the functional quality score used to determine CPC (for Adwords).

  • Adrian Huth

    Love this comment. This is exactly why having CTR as the main QS factor is actually the opposite of the relevance Google supposedly is providing users. They created a system where, unless branded keywords, the advertiser has to improve CTR by creating more generic or even misleading ad copy and punishes people who use ad copy as a filter to separate the wheat from the chaff as you mention.

  • Martin Röttgerding

    In the ad auction it’s just CTR (or rather estimated click-through probability, to be precise). However, using a value relative to others wouldn’t change anything.

    An advertiser’s relative CTR would be CTR divided by average CTR. Since everyone’s CTR would have to be divided by the same number, the outcome of the auction wouldn’t change. If the AdRanks are 4, 5, and 12 or 40, 50, and 120 – the positions stay the same and so do CPC’s.

  • LampyB

    Don’t get your panties in bunch, it’s the internet and everyone’s entitled to an opinion. If you disagree, it’s your choice! I’d just like to see you post more relevant information here. Do you have any data to back your harsh words?

    “QS optimization is only going to move you up 2 points typically, 3 points in rare circumstances. Those are undeniable facts which are not debatable.”

    Where’s your data to back this up? If you’re going to call someone out, stating they must “bring forward the analytic views and prove me wrong” then I’d expect you to do the same.

    Also, your assumption states that the only keyword terms with QS of 8,9,10 are branded. This isn’t true. There are MANY instances where QS will be 8,9,10 for non-branded terms…I see it every day. You’re obviously the man when it comes to PPC, I guess we should all just take your word for it?

  • http://www.LeadDiscovery.com/ Jerry Nordstrom

    Larry I really enjoy your data driven articles.

    I would like to see the number of conversions overlaid on your QS vs cost graph.

    What is success?
    # of sales, # of leads/prospects, Low CPA, Lifetime Customer Value, Initial revenue?

    Incentive drives PPC management styles.
    Each PPC marketer will have different short and long term incentives to meet the requirements of their client/employer. The more sophisticated and accurate a company’s tracking and reporting system is, the better the can make the PPC manager account for performance.

    If a business never measures lifetime value of a new customer, only the initial revenue then quantity will trump quality making QS less important. Who cares if the customer sticks… that’s Sales and CS’ fault.

    If the sale takes place AFTER the online conversion, once again the PPC manager may not be accountable for quality, but rather quantity.

    The highest quality score may not always be the best point in the Sales/Revenue bell curve.

    To effectively manage your PPC agency or employee, make sure you have the data necessary to cross check PPC performance. Then you can develop the right incentives for the manager and s/he will create a campaign model to achieve those goals.

  • Larry Kim

    hi – my view of the data is that this (a strategy involving trying to go after low CTR keywords) will absolutely not work. I did not see any evidence that low CTR/QS keywords convert any better than high CTR/QS keywords. However, the CPCs are *so much higher* on the low CTR/QS keywords and *so much lower* on high CTR/QS keywords that the CPAs we just too high on low CTR/QS keywords.

  • Larry Kim

    yes, exactly. on average, you’re better off pursuing HIGH ctr/QS for a portfolio of relevant keywords.

  • Larry Kim

    impression weighted average quality score.
    so say you have 3 keywords in an account, a, b and c, with quality scores of 1, 5 and 10, having 0, 20, and 50 impressions, respectively.

    the impression weighted quality score is (1*0) + (5*20) + (10*50)
    then all divided by 70, which is the total number of impressions.

  • Larry Kim

    thanks for this note. it is hard to get data on customer lifetime value, etc. from the adwords – a lot of that data is stored in other systems within a company. But i agree that this kind of analysis is essential!

  • Larry Kim

    Adwords Quality Score, like Joffrey Baratheon, is the king many PPC managers love to hate :)

  • Larry Kim

    i see no big differences in conversion rates based on quality score. thus optimizing for CTR/QS results in (on average) far lower CPC’s and CPAs.
    i’d love to see your data if you’re seeing something different.

  • Ryan Bruss

    Hi, Larry. Sorry for the confusion. I understand impression weighting. My question was how did you use only exact match keywords in your calculation? If you did not, then your numbers won’t be accurate.

  • Larry Kim

    i used all match types. can you explain why this won’t be accurate? seems like a constant here. as long as i’m measuring the same thing across campaigns (and provided that there are a crap ton of campaigns) the constant cancels out.

  • Martin Röttgerding

    Yes, that’s my point: Conversion rate and quality score aren’t connected. No doubt, higher QS goes with lower CPA (and higher ROI, and higher profit) but that’s all just because of the lower CPC’s.

  • Ryan Bruss

    the problem is that the quality score for “keyword 1″ displayed in adwords is actually the quality score for [keyword 1]. so, when a user searches ‘keyword 1 abc’ or ‘keyword 1 xyz’ and they click on an ad served by “keyword 1″ the quality score used to calculate ad rank and cpc is NOT represented by what is displayed in adwords. because of this you would essentially be assigning the quality score of [keyword 1] to all the impressions for “keyword 1″ and keyword 1.

    this is not well documented by Google

  • Larry Kim

    yes i understand this to be the case. the question i’m asking here is do you believe the propensity for a keyword to be broad matched against something else to be so significantly different on average when looking at across millions of keywords and billions of impressions/clicks. I think the noise just cancels itself out in this situation.

  • Larry Kim

    YES! that’s what i’m saying too.
    thus, i think it’s crazy to not be optimizing an account for CTR/Quality Score (essentially same thing).

  • Ryan Bruss

    yes i do. I’ve worked on many accounts with many different organizations with wildly different exact, phrase, and broad match impression rations. There seems to be too many unknowns.

  • Ryan Bruss

    there is another factor that needs to be addressed. quality score only matters relative to the competitive set of advertisers. it can also be skewed by the nature of the query. general queries tend to have lower quality scores. in those situations a 4 or 5 may be the best you can hope for, but it doesn’t really matter because all the advertisers are in the same situation.

  • Larry Kim

    that’s my point! it’s the same for all.

  • Manuele Caddeo

    I share your thoughts about everything. When you have as objective lead generation or Sales and in game there are keyword whit high competiton, keep QS as high possible is the first thing i take care. If you have an 1% conversion rate means every 100 clic you convert, and there is much difference if you pay 0,50 cent for clic or 0,70-0,80$ !!!
    Hi, Manuele

  • Ryan Bruss

    what’s not the same is the relative share of exact, phrase, and broad match impressions

  • Jeff Ferguson

    Interesting research, however, there’s a semantic issue here: Quality Score isn’t a KPI.

    A KPI would be metric tied to the success of the business for which the campaign is run. The success of the campaign is not the campaign itself, but what it accomplishes for the business.

    Therefore, Quality Score, along with many of other metrics discussed here are a diagnostic metric, not a KPI.

    You could chase Quality Score all day while your business goes under because you’re focused on the wrong metric. This is a habit we all need to get out of with a quickness.

    These articles are great from an educational standpoint, but as someone who is on the front line with clients, it has long since “gotten old” to have the advertiser state they need more clicks, a higher CTR, or a better Quality Score, when in fact what they need is more sales, revenue, leads, etc.

    Just the same, thank you for the research.

  • Nozulu Mchumane Mpafane Solly

    “If your quality score goes up, your CPC’s might fall, but it won’t make people buy from you.”

    Good statement Martin, this is so true

  • AdwordsExperts.com

    I’m always amazed at the haters, it makes me question why the hell anyone would employ your opinions.

    The article is on point in regards to the relationship of QS to CPA. Some of you need to get back to your labs and work on your research.

 

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