Improved top ad placement formula now in effect

Two weeks ago, we posted about an upcoming improvement to the formula used to determine which ads are placed in the top spots above Google search results. The change offers advertisers more control over when their ads achieve top placement, while also increasing the quality of our ad results for users. Today, we wanted to let you know that the improved formula is now in effect.

To recap, the key change to the formula is how we consider price. Like the formula used for ranking ads alongside Google search results, the top ad placement formula now considers an ad's maximum CPC. Previously, the formula for top placement considered an ad's actual CPC. Since actual CPC is determined, in part, by the bidding behavior of the advertisers below you, your ad’s chance of being promoted to a top spot could have been constrained by a factor you couldn't influence.

As always, the top ad placement formula will weight Quality Score much more heavily in comparison to maximum CPC, which means that the quality of an ad remains the greatest factor in determining an ad's eligibility for top placement. In other words, an ad with a low quality score but high maximum CPC still cannot achieve top placement.

Beginning today, the actual CPC you pay for an ad in a top spot will continue to be determined by the auction, but subject to a minimum price. The minimum price is based on the quality of your ad and is the minimum amount required for your ad to achieve top placement above Google search results. As always, your actual CPC will be discounted and the higher your ad’s quality, the less you will pay.

Since announcing this improvement to the top ad placement formula, we've received lots of questions from advertisers who are curious about how their accounts may be affected. Advertisers with ads in or near a top spot may begin to see a change in the average number of clicks these ads receive, and also in their CPCs. The degree to which your clicks and CPCs may be impacted will depend on a number of factors, so it's difficult to say today how much of a difference you can expect to see. Therefore, rather than making adjustments now based on assumptions, you may want to monitor your account as-is for the next few days or weeks to see how much of a true impact the improved formula will have.

If, on the other hand, you are thinking about making adjustments now, keep the following in mind:

• Review your account for maximum CPCs that are higher than the maximum amount you're willing to pay.
  
• Optimize your accounts to keep your costs down and your performance high. You can request a free campaign optimization from our support team here.
  

Posted by Judy, Inside AdWords crew