The reserve price for your ad. If your bid is lower than the threshold, your ad won’t show. And if none of your competitors are eligible to show, the threshold (reserve price) is the price that you pay for the click.
Thresholds are determined dynamically at the time of each auction based on various factors, including:
- Your ad quality: To help maintain a high quality ad experience for consumers, lower quality ads have higher thresholds.
- Ad position: Ads that appear higher on the search results page have higher thresholds than ads that appear lower on the page. That way people are more likely to see higher quality ads higher on the page.
- User signals and attributes such as location and device type: Thresholds can vary based on user attributes, including the location of the user (for example, thresholds can vary country by country) and the device that the user is using (for example, mobile versus desktop).
- The topic and nature of the search: Thresholds can vary based on the nature of the user’s search terms. For example, thresholds for wedding-related searches may be different from searches for basket-weaving classes.
- Related Auctions: Thresholds can also depend on the auctions for related queries. For example, Ad Rank thresholds for the search term [car insurance] could be informed by auctions for the search terms [auto insurance] and [collision insurance].
These factors help ensure that when it comes to the ads that users see and the price that advertisers pay, the right consideration is given to the quality of the user experience, advertiser bids and the value that advertisers place on users’ engagement with their ads.
How Ad Rank thresholds affect your CPC
Your actual CPC is calculated based on your Ad Rank, including the thresholds and competition from other advertisers.
If your ad is the only one that’s eligible to show, (for example, because none of your competitors meet their Ad Rank thresholds), you’ll pay the reserve price (the threshold rounded up to the minimum billable unit in your country, for example to the next penny in the UK). This means that depending on your ad quality and Ad Rank thresholds your ad could be relatively expensive, even when no ads show immediately below it.