The revised formula will now consider an ad’s maximum CPC as opposed to the actual CPC. The announcement reveals that earlier top spot advertisers may have unwittingly by-passed recent enhancements to the Quality Score factors – quenching any conspiracy theories, it simply admits a flaw in the formula.
Since actual CPC is determined, in part, by the bidding behavior of the advertisers below you, your ad’s chance of being promoted to a top spot could have been constrained by a factor you couldn’t influence.
My own firm has submitted arguments to Account Managers on numerous occasions; that noticeably lower quality ads were seemingly glued to AdWords top spots – only to be fobbed off with references to keyword placement or landing page relevance.
Advertisers that have enjoyed top spot placement but have not concerned themselves with the Quality Score may be treading a rocky road. The AdWords team urge you to sit tight, not to make any knee-jerk reactions and to study your campaign performance before making any changes.
The degree to which your clicks and CPCs may be impacted will depend on a number of factors… you may want to monitor your account as-is for the next few days or weeks to see how much of a true impact the improved formula will have.
To conclude: The playing field has [mostly] been leveled. Like the formula used for ranking ads alongside Google search results, the new top spot ad placement formula will weight Quality Score alongside (but more heavily than) maximum CPC – meaning that the quality of any ad is charged as the greatest factor throughout the system. Although there will be a minimum price to achieve top placement, your actual CPC in these positions should still fall in line with improvements you make to the quality of your ad.