Quality Scores Test Case: How frequently Does Google Update It?

My Ongoing Efforts to Improve Adwords QS

About this post:

Just a little bit about me before I begin - I manage an Adwords account for a SaaS business, and have been constantly working on improving the Quality Scores of keywords across various campaigns. One of the reasons, I'm creating this post is to maintain a documentation of my keyword optimization activities and whether or not they had any impact on Quality Scores, and how long did it take to change the scores.

Why Do I Focus On QS?

The impact of a Good Quality Score is pretty much well documented across various other blogs. A Quality score of 6 and above gives you cheaper CPCs for higher ad positions, and a more frequent eligibility to have your ad extensions shown. I jotted down some scenarios, and came across a very interesting finding - i.e. with a Good Quality Score, my ad could show at the #2 position and still end up paying a lower CPC than the competitor on #3 or#4 as an example. 

Refer: A Hypothetical Google Auction Simulation I Wrote Down:

Here you can see how Advertiser B who wins the 2nd Ad position, is paying lesser than Advertiser C in 3rd position.

For those of you who are unfamiliar with how the Google auction, Ad Rank and Quality Scores determine your actual CPC, here's an explanation. If you already know the workings of the QS, you can skip the explanation and move onto the following section where I document my keyword optimizations.

The Adwords Bidding Process and the actual CPCs

There are 3 interlinked components that determine the final CPC each advertiser ends up paying:

1. Quality Score: The Quality Score in the real-time auction is NOT the same as the Quality Score shown in your Adwords QS column. The real-time QS varies from auction to auction. The QS shown in your Adwords interface is a fairly good representation of your daily average QS.
2. Bid: The Max CPC set by the advertiser for the keyword
3. Ad Rank: Ad Rank is the product of your Bid and Quality Score. i.e. Ad Rank = Bid x QS

The actual CPC paid by each advertiser is the Ad Rank (of  the Advertiser below him)/His Own QS + $0.01

A quick but simple example:

Advertiser	Quality Score	Max CPC (Bid)	Ad Rank	Actual CPC	Ad Position
A	10	$1.50	15	$1.41	1
B	8	$1.75	14	$1.51	2
C	6	$2.00	12	$1.01	3
D	3	$2.00	6	x	Ad Not shown

Advertiser D's Ad Rank is 6 (Bid x QS)
Hence, Advertiser C's actual CPC will be:
Ad Rank of D / QS of C + $0.01
i.e. 6/6 + $0.01 = $1.01

To Be Continued.....