Back in the good old days, AdWords worked in a very basic way. The higher your bid per click, the higher your position. Simple. There are a lot of other PPC networks still operating on this model and that is one reason nobody can remember their names.
Two years ago (I think) when Google dragged it’s advertisers kicking and screaming into the new Quality based bidding system, the game completely changed. Google AdWords no longer operates on a “highest bid wins” system but on a rather confusing and sometimes illusive set of quality criteria.
Some people find it very difficult to get their heads around how this “quality” effects their bid prices and ultimately their ROI. Today, Google’s Chief Economist, Hal Varian has posted a fantastic video that simplifies the whole system and makes it easy for anyone to understand.
Get the Flash Player to see this Google AdWords tutorial about building your keyword list.
Easy to understand or what?
Now that you understand quality score a little better, realize how important it is to improve your quality score by increasing your click through rate and re-evaluating your landing page relevancy, what are you waiting for? Even if you increase your CTR by 0.01% a day over a month, that can be enough to bump your keywords quality score up and reduce your overall costs significantly.