Here’s a fun fact: every 1-point increase in your AdWords quality score decreases your cost-per-conversion by 13-16%.

Sure makes quality score sound important, right?

But what if I told you that expensive ads with low quality score often lead to more profit than high-quality, low cost ads (also a fact)?

confused

Confused? You’re not alone. The debate over quality score’s true value is as heated as the case of Batman v. Superman (despite Zack Snyder’s attempts at resolution).

Some claim that quality score is “king of the AdWords KPIs,” while others feel it’s hardly worth your time.

The truth lies closer to the middle. Quality score may not be the PPC end-all, be-all, but it has its place, and can certainly make a difference in your campaigns.

To help you use your quality scores more effectively, let’s take a look at what AdWords quality score really represents and highlight some simple ways you can use it to increase the efficiency of your paid search advertising.

What is Quality Score?

To start, let’s address the question of what quality score is and why it exists.

Google is a search engine. As such, Google’s success or failure depends on its reputation for providing search results that match the intention of each searcher.

After all, if people don’t find what they’re looking for, they’re going to start looking elsewhere.

The same goes for ads. If people search for “Wal Mart stores” and get ads for Target, Google loses credibility. If Google search results (including ads) seem less credible, people will start looking for a more reliable search engine.

So, to incentivize companies to make relevant ads, Google created quality score, which ranks ads by how closely they match searcher intent.

Ads with high quality score are rewarded with lower cost per click and better ad position, while low scoring ads get the opposite treatment.

Here’s a breakdown of the effect quality score has on keyword metrics (courtesy of Wordstream):

quality-score-and-cpc

As you can see, the higher your quality score is, the lower your cost-per-click (CPC) will be. The lower your quality score is, the more you’ll pay for each click.

What this Means for You

High quality scores make for cheaper clicks. It seems simple enough, so why not overhaul your marketing to increase quality score, and start enjoying the savings?

Well, because the point of PPC marketing isn’t to just get cheap clicks.

If your idea of effective marketing is “doing things on the cheap,” then the name “pay per click” should have scared you off before you even started.

The effectiveness of your online marketing has less to do with the price of clicks and more to do with how many conversions and sales those clicks are driving. In some cases, a high-cost ad that gets a lot of high-quality traffic will be more profitable than a low-cost, low-traffic ad.

For example, if you bid on your competitors’ branded terms, you can expect your quality score to be in the range of 1 to 2, but under the right conditions you might still siphon off enough traffic from competitors to make it a profitable investment.

Quality Score and Cost per Conversion

Now, at this point, you might be thinking, But Jake, didn’t you say at the beginning that high quality scores led to lower cost-per-conversion? Doesn’t that mean that improving your quality score improves both your CPC and your cost-per-conversion?

You’re right, I did! And I’m not the first person to say that, either.

But here’s the thing, statistics can be deceiving. Let me show you where this number comes from.

The following graph represents data from the more than 2,000 AdWords account audits I’ve performed over the last 3 years. I’ve selected companies that had very high quality conversion tracking in place (including phone calls, chats, forms, etc) and plotted their ad quality score against cost per conversion.

quality-score-vs-cost-per-conversion

The awkward diagonal line at the bottom of the graph represents the average trend for all the data points.

Using this model, you can see that on average every point increase in quality score correlates to 13% lower cost per click. A similar analysis by Wordstream’s Larry Kim found the amount to be 16%.

But before you’re satisfied with this explanation, you might want to look at the graph again and realize that the data itself doesn’t fit the trend line very well.

If quality score was a major predictor of cost-per-conversion, then all of the dots ought to line up right around the trend-line, but that’s clearly not the case. In fact, a little regression analysis on this data reveals that the model is only 1.2% accurate (R = 0.012)!

So a 1 point increase in quality score leads to a 13% decrease in cost per click only 1.2% of the time? Does that really seem like a metric worth your time and focus?

What Else is There?

If quality score explains only about 1% of cost per conversion, then there must be some much bigger players that you could focus on first.

For example, the typical AdWords account spends most of its budget on keywords which produce clicks…but not conversions. On average, 76% of an account’s budget is spent on these clicks, driving up cost-per-conversion without giving any benefit in return.

Let’s take a look at the same audit data we used to evaluate quality score to see how much influence wasted ad spend has on cost per conversion:

wasted-ad-spend-vs-cost-per-conversion

According to this data, every 10% increase in wasted budget leads to 44-72% higher cost per conversion.

But how accurate is this model? A little log level regression uncovers that wasted ad spend accounts for about 60% of cost per conversion (R2 = 0.597).

It’s not a perfect model either, but it’s a big enough piece of the pie to be worth your consideration.

What to Do about Quality Score

Now, in saying that quality score is only 1% of the cost per conversion equation, I don’t mean to imply that it should be ignored entirely.

After all, if you’re wasting most of your budget on the wrong clicks, spending more or less isn’t really going to affect your cost-per-conversion very much. So, if your account falls into this category, I’d focus on reducing wasted ad spend first.

However, once your accounts have been cleaned up and you’re looking for additional ways to boost performance, there are a few ways you can use quality score to your advantage.

The first step is to add quality score to your keywords report like so:

adding-quality-score-column

Export your results into Excel, which will allow you to do some meaningful analysis on what the quality scores in your account are costing you.

To start analyzing, select all of the data in your new spreadsheet and create a pivot table.

creating-an-excel-pivot-table

If you set up your pivot table as seen below, you can tell how much you are spending on each quality score integer.

pivot-table-set-up

Just getting to this point may reveal some interesting things about your account. In the case of this client, 12% of their budget was spent on ads with a quality score of 1 (vs. only 9% on those with a quality score of 8).

This doesn’t necessarily mean that these ads are unprofitable, but their low quality score was costing the company money unnecessarily. If all of this company’s 1-scoring ads could be upgraded only to a score of 2, then it would have saved them over $22,000!

There could be a lot of these quality score 1 keywords and ads to deal with though, so rather than giving them all attention, it would make more sense to find the top offenders and fix them first.

You can do this by setting up another pivot table to filter for keywords with both a quality score of 1 and over $500 of cost.

pivot-table-by-keyword-cost

This identifies the costliest keywords (nine of them in this case) which is a very reasonable number to start working with.

By examining the ads and landing pages attached to these keywords and then A/B testing adjustments to improve their relevance, quality score is will rise and shore up some of the financial leaks in the account.

Summary

Ultimately, when you get into the data, it seems like quality score probably matters more to Google than it should to you. Quality score is only one part of the overall marketing picture and chances are that your accounts will benefit more from bigger changes than constant tweaking to beat your quality high score.

Your marketing should focus on turning a profit, but if—with a little analysis—you find that quality score is holding your profits back on certain keywords, then some attention is appropriate.