Advertisers often aim for top placement because they find that their ads perform the best when they appear above Google search results. Since these ads must meet or exceed a top placement quality threshold, our users receive high quality ad results while advertisers get the traffic they desire – a win-win situation.

Quality Score is the greatest determining factor in top ad placement, which means no one will ever be able to pay their way to the top. We have, however, been working on an improvement to the top ad placement formula that will soon offer advertisers more control over achieving top placement while increasing the quality of our ad results for users.

The key change to the formula will be how we consider price. Today’s formula considers an ad’s Quality Score and actual cost-per-click (CPC). The improved formula will still heavily weight Quality Score, but instead of actual CPC, it will consider an ad’s maximum CPC. Here’s why:

Actual CPC is determined, in part, by the bidding behavior of the advertisers below you. This means that your ad’s chance of being promoted to a top spot could be constrained by a factor you cannot influence. By considering your ad’s maximum CPC, a value you set, you will have more control over achieving top ad placement.

In addition to increasing control for advertisers, the improved formula increases the quality of our top ads for users. This is due to more high quality ads becoming eligible for top placement, thereby allowing our system to choose from a larger pool of high quality ads to show our users.

The improved formula will go into effect within the next few weeks. For a full explanation of how the top ad placement formula will be changing, please see this AdWords Help Center FAQ. We encourage you to read the FAQ in its entirety since this change may affect the performance of your ads – e.g. in some cases, some ads previously showing alongside search results may begin to show in top spots, and vice versa.

Once the improved formula goes live, we'll update you here on the Inside AdWords blog so stay tuned.