LucidSW - 2:34 pm on Sep 9, 2011 (gmt 0)
> I've tested their ads
You should never do this. You should be different. Besides, doesn't mean you'd get the same results. Why would I click on one ad or another if they are both the same?
> the domain name is an exact match for the keyword
> Are you sure quality score gets calculated on the a per ad basis?
Positive. Remember I said the ad-keyword, not just the ad. Yes, QS is shown at keyword level. But think about it logically. Which has the most influence, the keyword or the ad? You can test this out.
> the ad with the lower CTR is the better performer
It can happen but in your case, no. I also don't understand your logic and calculation.
The CTRs have a difference of almost twice the rate. Unless the lower CTR ad has a conversion rate of twice that the first, then they are similar ROI-wise. But you say they are identical. Therefore, you win twice with the higher CTR ad. It gets a higher QS which keeps costs down and competitors at bay. You also get more sales per visitor and therefore more revenues and profits.
> hope you can follow all that
I think I do. There is no subsidizing. There's no such thing in PPC.
You have two active ads. Each ad has a QS related to the keyword in question.
Ad(1) with Kw(1) = QS(1)
Ad(2) with Kw(1) = QS(2)
So what QS is used at the keyword level if each ad has it's own QS (which could be very different) for that keyword? Seems obvious it's an average but the actual calculations for ranking and costs use the QS for that ad-keyword.
Your situation being in first position all the time makes it simpler. Your CPC is the clue: the lower CTR has a higher CPC. Look at the formula. It means your QS for that ad is lower.
If you stopped the higher CTR ad from showing, the CPC for the other ad would be the same. Of course, that's assuming everything else stays the same such as competitors using the same ads and bidding the same.
> if I then run an ad that has a 24% CTR do I get any further QS boost?
I believe you do. You can test that yourself. Is the QS of the 14% ad indeed 10? If so, then because your CPC is lower, the QS of the other ad must be higher. Ten is just the upper display limit and only shows as an integer. The actual QS used in calculations as mentioned has many decimal places and I'm convinced goes higher than ten. Therefore, even if you do achieve a ten, you can still improve. I realized this myself a few years back when a client with mostly QS of 10 wanted to see if I can reduce his costs further. I did with ads having higher CTR. Conclusion: QS in the backend can be higher than ten.
You can post links here at WebmasterWorld but add a dot com to Lucid Web Marketing and check out my free ebook which goes into more details on how QS is calculated. It's basically a standard deviation calculation.