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This is calculated by multiplying the maximum cost per click bid (the most you’re willing to pay for a click) by your Quality Score (Google’s rating of the quality of your ads).
(Note: Google recently updated Ad Rank to include the expected performance of ad extensions, but the basic principle is the same.) In this example, you can see exactly how much Quality Score can affect your performance in this live auction.
Here, you can see in more detail what it takes to be an Ad Words Unicorn, with the required CTR for each ad position listed in this table: So how do they do it? Understanding how the Ad Words auction works is critical if you are going to optimize and improve your performance. Google needs to determine the ranking position for each ad, as well as the cost of each click, in real time for each ad in the auction.
Google uses Ad Rank to help determine your placement in the auction and your CPC.
What does it take to be one those stand-out advertisers?
The bottom 50% of advertisers are achieving CTRs of average or lower.
Quality Score isn’t calculated by your CTR alone, but by whether you’re over- or underperforming compared to the expected CTR.
In this next graph, you can clearly see just how important your CTRs are to your QS calculation.
What we found is that CTRs vary widely between advertisers, as you can see in the chart below.You can quickly check to see if your own CTR is higher or lower than average for your industry. If you want to be in the top 1%, you need an average CTR six times higher than the standard – we call these “Unicorns.” They’re rare, but I promise you, Ad Words Unicorns exist.They are not inherently better than you are; they simply work harder and optimize better.In this chart, you can see the expected or average CTR curve in orange, but I’ve also added the green and purple curves, to show you what you should aim for if you want to achieve CTRs two to three times the average.
We can see from this data that there are, indeed, a few stand-out accounts who are killing it and outpacing their competitors by far.Neither ad had a good Ad Words CTR and therefore neither were winners.