Since Google has built a reputation as the premier search engine based on its ability to display the most relevant search results (on both organic and paid/PPC listing), it rewards advertisers whose ads are most relevant to the keywords they are targeted at. So Google gives every Adwords ad a Quality Score, and the higher your score, the less you have to pay to rank well.
There are three major factors that impact your Quality Score: (1) relevance of the ad content to the keyword you bid on, (2) relevance of the landing page to your ad, and (3) the click-through-rate (CTR) that your ads receive.
Keyword Relevance
When you place an ad through Adwords, it contains several elements that affect relevancy: title, text, and display URL. The more relevant the title, text, and display URL are to the search query, the better Quality Score your ad will receive.
For instance, let’s say you bid on the keyword “dog walkers,” and the title of your ad is “Dog Walkers,” your ad text is “Find dog walkers in your area,” and the URL is “www.dogwalkingwebsite.com.” You will receive a higher quality score because all elements (title, text, and URL) of your PPC ad feature the keywords that you bid on.
Landing Page
Since Google wants its users to find the most relevant pages, even if you are paying to have those users come visit your site, it will also gauge the relevancy of your ad’s landing page. Be sure to develop landing pages that are targeted for each of your ad campaigns – i.e. relevant to the keywords you bid on – instead of linking the ads to your home page, which may be
too general for the specific advertised products or services you’re
advertising..
For instance, if you sell apples, oranges, and bananas, and you’re bidding on the keyword “buy apples online” and the landing page is your homepage where apples, oranges, and banana are all featured equally, then your ads will not receive as high of a quality score as it would if your landing page was dedicated only to your apple products.
Click-Through-Rate
Another way that Google gauges the relevancy of a page is by monitoring how many people click-through to it from the search results. The more frequently that users click your ads, the higher the Quality Score your ads receive. Google does this to reward advertisers who show their users the most relevant search results. After all, if no one clicks on a search result (paid or otherwise), it is probably not very relevant to the keyword/search-term.
Google will also give your entire Adwords account a Quality Score. So the CTR of all adgroups in your campaign in your account will be considered against your Quality Score. It's important to have the resources to properly monitor the CTR across all your campaigns to ensure that no one campaign is adversely affecting others.
Adwords Strategy
Like any other marketing channel, the performance of your Adwords campaigns depends largely on how well you target your promotions. This is why having your PPC ads rank well on Google is more nuanced than simply bidding the maximum CPC. Basically, the more targeted your Adwords ads are, the less you have to bid to have them rank well.
Investing in an SEM resource (such as an agency or in-house expert) can help maximize your Quality Score. In addition to helping you target the right keywords, they can ensure that your ads and landing pages are relevant to those keywords, and can monitor your CTR on an ongoing basis.