For those using [tag]Google Adwords[/tag] you may or may not know that just because you’re the highest bidder on certain [tag]keywords[/tag] you are not necessarily going to appear in the number one spot as you would if you were using [tag]MSN Adcenter[/tag] or [tag]Yahoo[/tag] [tag]PPC[/tag]. This is because Google determines your AdRank by taking into account not just your bids but the Click Thru Rate of your adverts aswell as other variables.
AdRank multiplies the predicted CTR against your MaxBid to determine position. However it doesn’t stop there, Google also applies an [tag]Ad Quality Score[/tag] which consists of various factors including historical [tag]keyword performance[/tag] across all advertisers, ad performance, relevance of the ad text / copy and other factors which Google have not released.
More recently Google has added the quality of your [tag]landing page[/tag] into the algorithim in determining your AdRank, meaning that you should always point your Google Adwords campaigns to the most relevant pages on your site. Remember Google prides itself on relevance so make everything you do relevant! It is also likely that Google will take into account your conversion tracking data when determining your AdRank. If your are converting visitors into buyers / signups etc your campaign will be considered ‘relevant’ and your AdRank will reflect this.
By testing & perfecting your Adwords campaigns you can often pay a fraction of the cost that your competitors are paying, whilst still out-ranking them!