How much can I lower my Cpc with an Excellent quality score?

Quality score, max cpc and Ad rank relations.

[EasyDev]

Just thinking about how much an AdWords user with a good Ctr history can spend less than an average user, being on the top position for a very competitive keyword...

We know that the position of the Ad depends by the formula:
Quality score x MaxCPC.

User1: Keyword QS 9 x MaxCpc 1,00$ = 1,00 x 9 = 9,00
User2: Keyword QS 7 x MaxCpc 1,20$ = 1,28 x 7 = 8,96
User2 to be first must bid at least 29% more than User1!

The difference between the two QS is 2 (9-7) and the ratio of 2/7 is 28%, so 28% should be the MAXIMUM advantage or the disadvantage determined by the QS reflected on CpcMax.

If I’m bidding 1,28 with a QS of 7 it is impossible for somebody to rank better than me with a MaxBid lower than 1,00 $ right?

Do You agree with me or You think that there are other considerations to add?

Thanks to You all!

[dpam]

Interesting theory, but of course trying to figure out what's going on inside the Google black box is tough work. For one thing, QS is probably not linear - so like PageRank a 9 may be way more than 2 better than a 7. Secondly, there is no way to know if there is not a multiplier of some other type on either QS or Bid, or other secret attributes to the AdRank calculation.

[Soze]

The only way you'll every really figure it out would be to create multiple adword accounts and target the same terms. Then adjust bids to see how it effects things.

Realistically though, QS is far more than just a single digit associated with the keyword. There could be 100 degrees of QS 10.

[CraigDanuloff]

Actually now that we get Quality Score in the API, we're tracking it in ClickEquations and will soon be able to plot Quality Score, CPC, and Avg Pos over time, so we can see/show the actual impact. There are many factors to each, so not saying the correlation will be 1:1, but it will be something.

Just the ability to look at Quality Score distribution graphs has been very revealing. Previously you just couldn't get a sense of where you were other than on an individual keyword basis.

[good2go]

From my experience doing what Soze suggested above, CTR is the biggest driver of QS.

Same word, same bid, different accounts higher CTR gets higher QS and better position

[Soze]

I find that QS is barely related to cpc anymore these days. It's all about ad history. This is apparent in the fact that we created a new ad and CPC went up astronomically. Even when we duped the ad exactly inside the very same adgroup.

Ad with less history was many times lower, even with the exact same text. Even with the same CTR and bid/position.

[JS_Harris]

When creating adwords campaigns it also seems to matter what you put in the first ad much more than in subsequent ads. The quality score seems to weight the original ad much more heavily. Something to consider when creating a new campaign.