When a customer types in a search request, a process occurs which is described as an ‘ad auction’, determining where your ad gets placed within the SERPS. This is based on a number of factors, but has been boiled down to a formula:
Your max CPC (cost per click) bid is how much you are willing to pay each time a person clicks on your ad. A lower CPC means you are getting a better return on your investment, but in the ad auction a higher CPC could place you in a more prominent position on the page and gain you more attention.
Your quality score is a little more complicated, but consists of factors like click-through rate, relevance of keywords and historical performance of past ads. Your ad rank obviously determines how high up the page you are, and therefore makes it more likely that you will get clicks. You can raise up your quality score by making your ad as relevant as possible, using the right keywords both within your ad, and on your landing site, to greater show your ad is aligned with the users search intent. A higher quality score means you can spend less on your max CPC bid in a way to reduce your expenditure, and maximise your web traffic.
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