Who better to explain the Google Ad Auction and the Google Adwords Quality Score than Google’s Chief Economist, Hal Varian?
In this video, Varian explains the AdWords Ad Auction and how an advertisers max CPC bid and quality score determine how much is paid for a click on Google.com.
In summary: Max CPC bid x Quality Score = Ad Rank.
Advertisers actual costs per click are calculated by dividing the next advertiser’s ad rank by the given advertiser’s quality score + $0.01.
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