Eurydice - 5:42 pm on Jun 9, 2010 (gmt 0)
Lucid, on p. 11-14, you write about Quality Score (QS). On p. 11, you write that QS has many factors. But later, you tend to write that QS is the value that one sees for the keyword QS in Keyword Editor. Your formulas tend to use 1-10 as values for QS.
However, I've seen formulas at Google where QS is much higher. They're not using KW QS. They're using a "Total QS", as in what you describe at the beginning (QS based on many factors). That QS value can be much higher than 10: I've seen formulas at Google where the QS was 100.
I asked a Google engineer if this was the upper limit and she said there is no upper limit. I asked "so it could be, say, 400?" and she said yes.
If you recalculate your formulas and use higher values, say QS 40 or QS 60, you'll see more interesting results. An advertiser can bid $0.50 and beat another advertiser who bids $10.00. (By the way, it's very confusing in your examples that you don't show cents, e.g., p. 19, where 30 and 23 should be shown as $0.30 and $0.23).
Google doesn't show the Total QS, only KW QS. How to tell if you have high (or low) Total QS: look at the difference between bid and CPC. If the difference is low (i.e., you bid $2 and you pay $1.93), then your QS is poor. I've seen cases where the bid was $2.00 and the CPC was $0.05. That's very good QS.
Lucid, thanks for writing about this and making it public. I wrote a complete description of the QS formula in my book that was published a bit more than a year ago. Most books on the market don't understand the QS formula or its implication.
In summary: Bids are a minor (very minor!) factor in your advertising. QS is the main factor. If you rely on ABM tools such as Kenshoo or Marin, it's extremely dangerous; your budget will be looted by Google. Spend 80% of your time on improving the QS, i.e., better ads, better AGs, better landing pages, better conversion process, etc.
(Download Lucid's doc before the moderators find it and remove the pointer :-)