This may be an interesting question for AdWords experts or AWA.
As far as I know, AdRank (pricing and positioning formula) is
calculated for an exact query and target context (language, country,
geo). Thus if I have a phrase match "widget" in my ad group, different
AdRank is calculated for the query "blue widget" and different for
"red widget", because my CTR of those phrases are different as well as
CTRs of my competitors.
So far it's clear. However, the question is, how does Google calculate
the AdRank, when CTRs of a particular exact query are not known? I
know people ask many unique queries, so it may happen quite often. For
instance such a query like "what is the difference between this
strange blue widget and that pale red one" -- moreover asked in
English from Austria.
What CTR is used for calculation is such a case?
So this is my understanding of AdRank and search query.
If someone makes a search query, Google will collect first all of the [exact] terms, then "phrase" terms and finally the broadmatch terms in the AdWords database to form the first pool of matched terms. Note that the CTR will be assigned to all of these terms at the time of search query was made. The assigned CTR is based on each term performance or a default CTR if it's new.
However, the question is, how does Google calculate the AdRank, when CTRs of a particular exact query are not known?
Google doesn't need to assign a CTR for the exact query since it isn't required in the AdRank formula. The AdRank formula is used for each keyword or term only.
After the terms were collected, Google does the first auction for each account. In this auction, a single ad will be selected to represent for each account. Thus, the second pool of ads (or selected terms) is formed.
The second auction is used to select a single ad for each landing URL from the second pool of ads based on the new policies. The third pool of selected ads is then formed for single ad per account per URL at the time of search query.
The third auction is to rank the ads for the display position.
All of these auctions are based on the AdRank for each term in the pool.
For the 'first' auction. This thread: [webmasterworld.com...] msg 10 & 11 show how the KWs are collected from each account.
I think it goes like this:
1. Search the accounts and determine 1 KW per account.
2. Pull one ad/domain name per account associated with that KW (this is an imporntant step - and not exactly sure when this occurs, or if it occurs twice. i.e. If in step 3, site X loses, does G check for a 2nd domain name which can be shown? - I doubt it, but it's a possibility)
3. Second auction is used to determine duplicate URLs.
4. Third auction is used to determine which ads will be displayed.
I have noticed that the average search time at Google for competitive KWs take a bit longer than it use to. If I set my settings to 100 and search on a very competitive phrase, it use to take 0.1-0.17 seconds to show results. Now it can take up to 0.5-1.2 seconds to show results. (and I've seen some as high as 2.3, where the 'fast' search is above 1.0 consistently).
Still fast, but not Google fast.
