Adwords Explained - Page 3
Ad position and Keyword matching

Determining actual ad position

Importantly however, while most people believe that the ad position is purely determined by the amount bid by the advertiser (referred to as the Max CPC), in fact Google use a calculation that takes into account the historial Click Thru Rate of the keyword in question, the relevance of the page that your ad points to on your website, the relevance of the ad to the page where the user arrives, and the performance of the advertisement which the user sees.  These factors are combined to form a "quality score" for each keyword combination that you advertise against:

Quality Score x Max CPC for that keyword = Ad position.

Here’s an example of 3 different advertisers who have all bid on the keyword phrase “vacuum cleaner”

* Unfortunately the specific quality score that your keyword combinations are receiving is not published by google, however Google does show you a basic rating for quality score (Good, OK, Poor) and the principles described below which contribute to the Google quality score will stand you in good stead in ensuring a strong ad position, and a good advertising result. 

So, perhaps unexpectedly, the advertiser who is offering the lowest bid in the example above - Hoover Vacuum’s would in fact have their advertisement displayed at the top of the Ads on Google for a cost of only $0.75 despite the competition bidding up to $3.60. This example is a little extreme, and usually such drastic increases in bid may override quality score factors, however this effectively illustrates the importance of achieving a strong Quality Score for your advertisements and keywords.  For this reason, it's very important that over time you focus on the following:

1. Achieving a strong Click Thru Rate on your keywords and associated advertisements
2. Ensuring that your ads are highly relevant to the keywords you are advertising against
3. Making sure that the page which you send people to on your website is relevant to both the advertisement shown and the keywords used

If you achieve a strong quality score for your keyword combinations, then you can retain a higher ad position for a lower bid, allowing you to either lower your bids and maintain the same ad position - or elevate your ad position for the same Max CPC bid. 

Keyword Matching Strategies

Keywords Google offer three main keyword matching strategies. Note: none of these matching strategies are case sensitive, however all are heavily dependant on sequence of keywords and the inclusion of extra words in a search term.

Phrase Match

Phrase matches occur when a user types exactly what you have specified in the quotation marks. For example:

“vacuum cleaner”

This will only be triggered as a match when the user types in vacuum cleaner in that order ie a user search query on ‘cleaner vacuum’ ……will not match, however ‘vacuum cleaner salesman’ or ‘vacuum cleaners’ will match as will ‘buying a vacuum cleaner’ as in each case the phrase exists within the user search query exactly as specified in the the keyword phrase.

Broad Match

Broad match keywords are simply entered into the Adwords system with no special formatting or characters as follows:

vacuum cleaner

This will match any search term that contains the words vacuum and cleaner, so it will match ‘cleaner vacuum’, or ‘buying a vacuum cleaner’ or ‘how does the vacuum in my cleaner work’. It will also match ‘vacuum cleaners’ and ‘vacuums cleaner’ and other derivatives of this term.

Exact Match

This matching strategy will require the term to be entered exactly as it is specified. Exact matches are entered by enclosing them in [ ] square brackets. So an exact match term of :

[vacuum cleaner]

…..will only match ‘vacuum cleaner’ entered by the user and will not match for example ‘vacuum cleaner salesman’ or ‘vacuum cleaners’.

Negative Match

Entered at the Campaign level or the Ad Group level, negative keywords give the user the ability to not display their advertisement when certain keywords appear. So for the Vacuum Cleaner campaign discussed above, a negative keyword ‘repairs’ could be entered against that campaign to ensure that the advertisements are not shown when someone is searching for information about ‘vacuum cleaner repairs’ (if that was a service that the advertiser didn’t offer). These can be entered as single words with the minus ‘-‘ sign in front of them ie
‘–car’ will not display your ad whenever car is entered as a search term.

Later in this document we describe various strategies for identifying new keywords that can be added to your Adwords campaigns to improve advertising exposure. These same techniques can be applied to identifying negative keywords. As you review various potential keywords (for instance, those offered by the Google keyword suggestion tool), you will likely see some that clearly don’t relate to what you are offering. Considering adding these as negative keywords to your Google Campaign or Ad Group to prevent your ads from being shown when the user is searching for these terms.

When to use each match type?

At the risk of oversimplifying things, the following rules of thumb can be applied with moderate success.

Broad Match: used to increase the supply of ad impressions or increase the number of times your ad is shown. The fewer words used, and therefore the broader the match, the greater the supply of ad impressions that you’ll attract (we’ll get into other strategies for broad match use later in this document)
Phrase Match & Exact Match: these are most effectively used as measurement tools, and ways to test whether specific terms crafted in specific ways – actually result in an increased CTR….these are very effective tools for campaign refinement once the basics have been established.
Negative Match: is used to cull or eliminated poorly targeted customers who may be searching for unrelated topics.

Despite these strategies for increasing impressions, the overriding factor to be analysed in order to achieve success is the conversion rate of different keywords.   A broad matched keyword which converts poorly may chew up all of your ad budget and deliver few resulting conversions.    For this reason, a balance must always be struck between gaining enough displays of your ad, but focusing on the ads and keywords which are delivering results (conversions) at the lowest cost.

Page 4....How to structure your Adwords account.