Summary: Back in May, Google Adwords added a new filter and reporting feature called “Auction Insights”. As you might expect, the feature provides advertisers with some insight into how their competitors’ ads are performing. Insights is a great new feature, but it’s somewhat limited because while it provides some great advanced impression information about competitors’ ads, it doesn’t tell you much about how those ads perform in terms of conversions or click-throughs. In today’s post we break down the anatomy of the ad auction and discuss the setup of the auction insights filter.
Earlier this year, Google Adwords rolled out a new reporting feature called Auction Insights, which gives advertisers a glimpse into a handful of performance metrics for their competitors’ ads. I say a handful of because, as great as this data is, they aren’t giving away the farm here. It’s a nice tool, but like the new Adwords date comparison feature we discussed recently, I’m left underwhelmed and wanting much more. Before we get into the minutia, I think it would be beneficial for beginners if we briefly touch on the “auction” we’re talking about when we discuss “auction insights”…
What is the Adwords Ad Auction?
The easiest way to think about the Google’s Adwords ad auction is to consider it the ranking algorithm for PPC ads. We all know Google has sophisticated ranking algorithms for its organic (free) search results, but have you ever wondered how they determine which advertisements should be shown and in what position for any given keyword search? Well, they use what is known as their ad auction to decide. Google summarizes it this way:
- Here’s how the auction works:
- When someone searches, the AdWords system finds all ads whose keywords match that search.
- From those ads, the system ignores any that aren’t eligible, like ads that target a different country or are disapproved.
- Of the remaining ads, those with sufficient Quality Scores and bids may show, ordered on the page based on their Ad Rank (a combination of Quality Score and bid amount).
Google Adwords Quality Score
There are a variety of things that impact your quality score such as keyword relevancy, ad relevancy, landing page and account performance history and quality score is recalculated every time your ads are illegible for the auction (i.e. whenever someone searches for one of your keywords). Google breaks down their different QS influencers like this:
- Your keyword’s past clickthrough rate (CTR): How often that keyword led to clicks on your ad
- Your display URL’s past CTR: How often you received clicks with your display URL
- Your account history: The overall CTR of all the ads and keywords in your account
- The quality of your landing page: How relevant, transparent, and easy-to-navigate your page is
- Your keyword/ad relevance: How relevant your keyword is to your ads
- Your keyword/search relevance: How relevant your keyword is to what a customer searches for
- Geographic performance: How successful your account has been in the regions you’re targeting
- Your ad’s performance on a site: How well your ad’s been doing on this and similar sites (if you’re targeting the Display Network)
- Your targeted devices: How well your ads have been performing on different types of devices, like desktops/laptops, mobile devices, and tablets – you get different Quality Scores for different types of devices
After Google’s sophisticated systems calculates your keyword’s quality score, it then uses that information to determine things like cost and ad position:
- Ad auction eligibility: Higher Quality Scores make it easier and cheaper for a keyword to enter the ad auction.
- Your keyword’s actual cost-per-click (CPC): Higher Quality Scores lead to lower CPCs. That means you pay less per click when your keyword has a higher Quality Score.
- Your keyword’s first page bid estimate: Higher Quality Scores lead to lower first page bid estimates. That means it’s easier for your ad to show on the first page of search results when your keyword has a higher Quality Score.
- Your keyword’s top of page bid estimate: Higher Quality Scores lead to lower top of page bid estimates. That means it’s easier for your ad to show towards the top of the page when your keyword has a higher Quality Score.
- Ad position: Higher Quality Scores lead to higher ad positions. That means your ad can show up higher on the page when your keyword has a higher Quality Score.
Watch this Quality Score video from Google for more:
Google Adwords Ad Rank
- Ad Rank determines your ad position — where your ad shows on the page in relation to other ads.
- The main components of your Ad Rank are your bids and the quality of your ads, keywords, and website as measured by what we call Quality Score. So even if your competition has higher bids than yours, you can still win a higher position at a lower price by using highly relevant keywords and ads.
- Your Ad Rank is recalculated each time your ad is eligible to appear, so your ad position can fluctuate each time depending on your competition at that moment.
Google also provides this helpful, short video explaining Ad Rank:
For more, visit Gooogle’s page on “Understanding ad position“.
So, now that you’ve had your crash course on what the Google Adwords ad auction, quality score and ad rank are, let’s get back to auction insights. Having an general understanding of how the advertising system chooses and ranks ads is obviously great, but before auctions insights, advertisers were largely left in the dark when it came to figuring out what their competitors were doing. As I mentioned earlier, Google isn’t totally opening the books to let you see everything your competitors are doing, but they are now giving you a taste. Take a look at the screenshot from one of our clients’ accounts below to see what I mean (click to enlarge):
As you can see, through Auction Insights reports, Adwords now provides advertisers with five competitive metrics – data they can use to compare against their competitors. Aside from the first column, which contains competitor URLs, these metrics are as follows:
- Average positionAverage position is a quick way to gauge how high your ads are ranking compared with those of other advertisers competing in the same auctions. Average position is the average rank of the ad in the auctions, which determines the order of the ads on the search results page.
- Impression shareImpression share is the percentage of impressions you received divided by the estimated number of impressions you were eligible to receive. Eligibility is based on your current ads’ targeting settings, approval statuses, bids, and Quality Scores. In the Auction insights report, impression share also tells you the impression share of other advertisers as a proportion of the auctions in which you were also competing.
- Overlap rateOverlap rate tells you how often you and another advertiser received impressions at the same time for this keyword.
- Position above ratePosition above rate tells you how often another advertiser’s ad was shown in a higher position that yours was in auctions in which you both received impressions.
- Top of page rateThis statistic tells you how often your ad (or the ad of another advertiser, depending on which row you are viewing) was shown at the top of the page, above the organic search results.
Obviously this new “insight” allows you to see if/where your competitors are doing better than your own ads. It’s probably unfair that I chose a keyword we dominate for, but hey, it’s my post! At any rate, you can see the value in this information. If your competitors are performing much better than you are for certain keywords, you can take a look at some of their ads and landing pages and possibly come up with some ideas on how to improve your campaigns.
As I said, auction insights is a great new “better than nothing” feature, and this information can certainly be helpful, but it’s still very limited in what it tells us because when you break it down, it’s all really just advanced impression data – not performance data. What would be more useful would be seeing competitors’ click-through and conversion rates, but that will understandably never happen. Google can’t be giving away that level of data. There’s transparency and then there’s giving away secrets/tactics used by professional advertisers to those that are less skilled. So sadly, don’t expect to be able to spy on your competition through insights, but at least they’re giving us something…
Unfortunately “Auction Insights” isn’t something that’s set up within your Adwords account by default, but the good news is that it only takes a minute or two to set up. Follow these simple but detailed instructions (along with screenshots) to get the insights filter set up in your account. Once you’ve set it up, you can return to your normal “Keywords” tab within your account, check the box next to any individual keyword you’d like to perform competitive analysis on and select “Auction Insights (single keyword only)” from the “Keyword details” drop-down, as seen below:
And that’s how you access a report like the one seen earlier in this post. Again, this can only be done at the individual keyword level, which only makes sense.
Have you used auction insights to improve your Google Adwords advertising campaigns? Maybe you just need help setting up the filter for the first time? Whatever your experience or question, please tell us your story in the comments below.