Tuesday , November 21 2017

Ads of own Google products with advertisers leads to impact on the prices of advertisers

Ads on Google for its own products results in charging the prices for advertisers

 

In the search engine,  Google and other sibling companies need to buy ads at  Alphabet and the company says that it works in such a way to ensure that its participation in the ad auction doesn’t directly expand for the other advertisers, this is due to advertisers  are charged if it was not bidding. However, Google decides which ads to show based on “quality score” assigned to each ad and how much amount the advertisers are willing to pay.

In the search engine,  Google and other sibling companies need to buy ads at  Alphabet and the company says that it works in such a way to ensure that its participation in the ad auction doesn’t directly expand for the other advertisers,  due to this  advertisers are charged.However, Google decides which ads to show based on “quality score” assigned to each ad and how much amount the advertisers are willing to pay.

In the search engine,  Google and other sibling companies need to buy ads at  Alphabet and the company says that it works in such a way to ensure that its participation in the ad auction doesn’t directly expand for the other advertisers, this is due to advertisers are charged if it was not bidding. However, Google decides which ads to show based on “quality score” assigned to each ad and how much amount the advertisers are willing to pay.

Google Ads

Ad auction

The ad auction ranks the advertisers based on their bids and Quality Score, it creates a competition situation among the advertisers. the winning ads are, therefore, the advertisers who are willing to pay more amount and the quality score ensures good user experience. This is how the search engines rank the ads of the advertisers on the web page and give the ranks. But the approach was different in the case if the Google products where in the list of ranks of competition.

Pricing of ads when Google competes with other advertisers

The Google’s house ad rules determined that when a Google ad competes with other advertisers in an auction, the Ad Rank of its ads will be taken out of the mix before calculating the CPCs of the other advertisers, because of this the advertisers are charged as if it was not bidding refers to. It clearly means that advertisers are charged if google didn’t win the ad position.

AdRank is mainly meant to describe the price an advertiser pays for an ad click.

The basic CPC calculation is:

AdRank of Advertiser below You/Your Quality Score + $0.01 = Your CPC

Below is the actual one where the ad auction works without Google

  Max Bid Quality score Adrank Position CPC ActualCPC
Advertiser1 4 8 32 1 27/8+.01 3.39
Advertiser2 3 9 27 2 24/9+.01 2.68
Advertiser3 6 4 24 3 16/4+.01 4.01
Advertiser4 8 2 16 4    

 Below is the one how the ad auction works when Google is competing with other advertisers

Max Bid Quality score Adrank Position CPC ActualCPC
Advertiser1 4 8 32 1 27/8+.01 3.39
Google 3 10 30 2 27/10+.01 2.71
Advertiser2 3 9 27 3 24/9+.01 2.68
Advertiser3 6 4 24 4 16/4+.01 4.01
Advertiser4 8 2 16 5  

From the above it is clear that the auction is skipping over Google’s AdRank and calculating Advertiser 1’s CPC based on the  AdRank of Advertiser 2, the prices stay the same as when Google wasn’t participating in the first auction scenario above.

It also clearly depicts that the Google wins the second position and shows its impact on the other advertisers.

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