It is widely known currently among Yahoo PPC advertisers that with panama update in early February the new metrics - Quality score was implemented to the ads. However, not everybody is aware of how exactly this variable will influence your campaign performance while it affects the keyword’s CPC directly.

After Yahoo’s ads ranking system has changed an advertiser might find his ad to be more, less or equally relevant to the average ads of competitors. This is based on predicted CTR for your ad and will be reflected on your campaign costs. While previous Yahoo bidding model considered only the CPC you are willing to pay, Panama makes the ad position calculation more flexible. Your add can appear higher than your competitor’s even though your CPC is lower as ad rank is calculated by multiplying ad’s predicted CPC with bid price.

As explained in a good article by Kevin Lee, ads with equal bids but a 23% difference in predicted CPCs makes the keyword price more than 23% higher for an advertiser whose Quality score is lower.

Definitely nobody is willing to overpay for the lack of quality of his advertising campaign. So what measures could be taken not to let it happen?

1. Group relevant keywords into the same ad groups making ad Titles and Descriptions use keywords appropriate for this particular ad group (consider using Dynamic Keywords Insertion to maximize the ad relevance)
2. Take the advantage of choosing the best performing creative by testing several ad copy variants.
3. Target your ads to the most relevant pages not being limited to the Home page only (consider changing your landing pages to make them more relevant as well as ensure higher conversion rate)
4. Refine your bids by increasing the bids with higher conversion rates and ROAS and decreasing the bids of the keywords that don’t supply an expected conversion level (conversion tracking tool installed needed).

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