There is an online version of the US debt clock which keeps track of the debt on a real time basis and also features a whole slew of metrics such as the debt per person, the amount of debt held by foreign countries, private debt per citizen (think credit and mortgages), and so on. Click here to see the clock being updated in real time. Absolutely staggering stuff. Makes me want to decrease my allocation to US equities…

Google first introduced Quality Score years ago, but changes they rolled out in August of 2008 recently increased visibility of the score in the AdWords interface and via their API, and a great new video by Google Chief Economist Hal Varian has pushed the discussion to a fever pitch.

Part of the appeal clearly is the fact that it’s a numeric value judgement Google is making about our keywords and account configuration. Like PageRank before it, as a search community we’ve proven the ability to go slightly bonkers about Google numbers that indicate and/or drive our success.

But just how important is Quality Score, and how significantly should it factor into the way PPC campaigns are managed?

It turns out Quality Score actually is a big deal, one that you ignore at your own risk and expense. The reason boils down to its inclusion in two formulas that Google uses to determine where (and if) your ads appear and how much you pay for clicks.

The first is the formula for Ad Rank. This is the math that decides which ads appear in the top slot, which sit in position #2, and so on all the way down to the point at which ads don’t get shown at all. The formula is:

Ad Rank = MaxCPC x Quality Score

Right there we see the importance of Quality Score. It’s equally as important as your bid in terms of when and where your ads are positioned. It’s the sweat-equity of PPC. A chance to out-gun the big spenders with your wit, savvy, charm and hard work.

So if your keyword earns a Quality Score of 20 and your nearest competitor earns only a Quality Score of 10 for that same keyword, your $2 MaxCPC will earn you a higher Ad Rank (and display position) than your competitor’s $3 MaxCPC. Your Ad Rank = 40 (20 x 2) while their Ad Rank = 30 (10 x 3).

If two competitors have similar or equal bids, obviously the higher Quality Score will earn a higher position.

And since there are often more advertisers than available display slots, the Ad Rank impact of Quality Score in many cases is the difference between an displaying and not displaying at all.

A discount card or a tax?

After Quality Score is used to determine the position of your ad, it is used again to calculate how much you’ll pay for each click.

The formula for your CPC on any keyword is based on the Ad Rank of the advertiser who scored just below you and your Quality Score.

Actual CPC = (Ad Rank just below yours ÷ Quality Score) + $0.01

Using the previous example, our Ad Rank was 40 while our competitors’ Ad Rank was 30. Our cost-per-click is then calculated as 30/20 + $0.01 or $1.51.

For every point (or fraction of a point) our Quality Score goes up, our cost-per-click goes down. And each rise in our Quality Score literally costs us less money on every click.

Assuming that the average Quality Score is 7 (which is our experience), earning a Quality Score of 10 is like getting a 30% discount. If your Quality Score is 5, then you’re paying a 40% per-click premium.

These are quite approximate values, because the numbers Google reports to us as Quality Scores aren’t the actual numbers they use in their calculations. We can assume they have much more precision than they share, and their numbers may or may not be exactly proportional to those they show us.

Click-through-rate drives Quality Score

There is no doubt Quality Score plays a critical role in your success with the keywords you buy. That part of the ‘hype’ is real.

But there is a challenge in sorting out all the claims of what to do about it. Google has listed the elements considered in their Quality Score calculation, but they have not precisely defined the role of each in their calculations.

As Google’s Dr. Varian says in his video, click-through-rate (CTR) is the largest component of the Quality Score calculation. Get a better CTR than your competitors and you should get a better Quality Score.

The CTR on the specific keyword is most important, but CTR is also tracked for each target URL and for the entire account—which means earning a high CTR for one keyword can have a broad positive effect.

The most direct and effective way to improve your CTR is by writing better text ads, and testing them to prove they’re better. Narrowing the breadth of keywords in any ad group so that all the queries those keywords attract are well suited to the text ads the ad group contains is also a very reasonable strategy.

Note that a great CTR from one keyword may be a lousy CTR for another. I don’t believe there are any absolutes so you can’t tell how good your click-through-rate is without knowing those of your competitors. You just have to strive for the best you can achieve.

Google has made clear that Quality Score is computed in real time and takes into account the search query and geography of the searcher. So if you get great CTR from New York and lousy CTR from Kansas, your Quality Scores should react accordingly.

Speaking at SMX West, Nicholas Fox, Director of Product Management at Google characterized the focus on CTR as the primary driver of Quality Score as relying on the “wisdom of crowds”—if lots of people “tell” Google that an ad is “high quality” by clicking on it, then Google believes it’s a high quality ad.

The non-CTR factors

It is my belief that most of the other Quality Score factors—including all the forms of relevance and the landing page items—are only seriously meaningful before a particular keyword has a well established CTR track record. In other words, Google use these factors to provide clues about the potential performance of a keyword that hasn’t yet proven itself. But once it has, they’ll go with the actual results.

The one exception is that landing pages which are deceptive, entirely unrelated, extremely slow or have other shady characteristics can lead to what is in effect a Quality Score penalty. Conversely, reasonably relevant and generally standard or even hyper-optimized landing pages can’t help Quality Score. In fact, Google has confirmed that landing page quality is not a factor when Quality Score is used in the Ad-Rank formula.

In my view the bloggers and tweeters out there who suggest that every keyword must be in the text ad and on the landing page, or that super-narrow ad groups, or any other non-CTR “secrets” are the way to achieve high Quality Score are mistaken. Like the SEO “keyword density” crowd of yesteryear, they’re reading more into the tea leaves that is there to be read.

Life in a Quality Score world

It wasn’t long ago that paid search managers could afford to ignore Quality Score in AdWords. Not Anymore. Today your low Quality Score keywords are lowering your volume and ROI, and your high Quality Score keywords are boosting your results.

You can monitor the Quality Score of your keywords easily in the new AdWords interface, and in a few of the better paid search management tools. By: Craig Danuloff

Right now, we are spending future generations into the poorhouse, and we really don’t care as long as we have the cash to keep the cable on, pay for text messages, or purchase $600 shower curtains.

President Obama said something yesterday about us no longer being able to spend, spend, spend in government, but I guess that does not include the healthcare reform Obama wants, the stimulus package we “need” or else the Earth will start hurling into the sun, or for the US to either bail out or purchase the US automakers.

I look at things in simple terms, and here is how I see things:

Some people made some really foolish moves when purchasing homes – people who could not really afford homes purchased them on really shaky grounds because they figured that the housing market would go up 10% per year. Then when it looked like this was not going to happen, people started defaulting on loans, banks foreclosed on houses they did not really want to own, and property values fell in many areas of the country.

The government got involved because elected officials need to appear to be helpful. What I never understood was that some Federal oversight failed, regulators were sleeping at the wheel, so as rational beings we wanted the same people who made the mistakes to fix the problem. We did that because they have the expertise. I am still scratching my head on this one.

We passed a bunch of spending bills, and some of them did very little to help the economy. So our legislators decided to spend money in other ways. It reminds me of seeing someone on the side of the road, head bend, hood popped open, wondering why the car has stalled. He (face it, it would be a “he”; a “she” would call AAA) takes a monkey wrench (or other item in the toolbox) and whacks part of the car. If it doesn’t fix the problem, he whacks another part of the engine. We are kinda doing the same thing right now, but our monkey wrench is 1 Trillion Dollar spending bills.

Here is what people are not talking about: (1) Unemployment is on the rise, but people are still making mortgage payments. What happens in several months when people start blowing through their emergency funds. (2) Most ARMs (adjustable rate mortgages) have not ratcheted up, yet. The first wave will hit in a year or so. What happens when this occurs.

Both of these events are what I like to call “Holy Cow” events. They are big, may affect housing prices and the economy, and will probably need our legislative bodies writing hundreds of billions of dollars in spending (because that’s what legislatures do).

Part of me wants to dress like a native American and attend one of these tea party events – though I think dressing like Pocahontas is not really PC unless you are on a Disney property.

Me, I am looking at the stock market gain more than 1,000 points over the last month or two, and I still think about the bad news on the horizon. But stock brokers are smart, right? I mean, they are a bit smarter than mortgage brokers and bank regulators, right?

I have started thinking about this tea party tax protest some more. Why could it not have been some wine tasting tax protest instead? I mean, that would have more appeal to me, and after thinking about this, I could use a drink.

Google may also be concerned with antitrust issues around any major search-related acquisition, we’ve heard (and others have noted).

Clearly there’s a lot of posturing going on, and quite possibly some dissent in the ranks at Twitter. The company is officially stating “Our goal is to build a profitable, independent company and we’re just getting started.” Which is exactly what any company would say under any circumstances. The fact that Facebook acquisition discussions got so far last year suggests that they were open to merger discussions. But the valuation needed to get a deal done has increased dramatically since then.

Would Google pay more than $1 billion for Twitter? No idea. But there’s no way Microsoft lets a deal be negotiated without putting its bid in, too. And if these two giants see Twitter as the future of search, $1 billion is peanuts.

The Near Term Deal

Meanwhile, business discussions between Twitter and Google continue. The deal Google wants: a real time feed of Twitter updates to speed indexing. Without that feed Google must independently index each Twitter user periodically to look for updates. That means it’s dreadfully slow in grabbing all those Twitter posts. And it’s also very expensive from a computing resource standpoint. A real time feed would be of huge value to Google, and they’d be smart to nail down a long term deal sooner rather than later.

A real time feed of Twitter posts would negate much of the head start Twitter has in the nascent real time search space. It would be a coup for Google to get the Twitter milk without having to buy the cow. The real question is, does Twitter fully understand the value of this feed?

It also announced that it had dismissed its chief financial officer, Gideon Yu. A Facebook spokesman, Larry Yu, would not provide details but said the company would look for a replacement who had experience running a public company. It is worth noting that Gideon Yu had that experience as the treasurer of Yahoo, before he went to YouTube and helped sell it to Google.

Regarding its financial state, Facebook said that in the quarter ending Tuesday, it beat its own internal projections and is on track to increase revenue by 70 percent this year.

It also said it had just completed its fifth straight quarter of profitability in terms of Ebitda (earnings before interest, taxes, depreciation and amortization) and is on track to be cash-flow positive by 2010.

The spokesman said the company did not need to raise more cash to get to profitability but would entertain the idea at the right valuation. “It’s all going to be a function of valuation and a valuation we are happy with,” he said. “It doesn’t mean a $15 billion valuation for preferred stock” — the deal Microsoft struck in 2007 — “but certainly we have a certain bar that we need to hit when it comes to our own belief on what we think our company is worth.”

Mr. Yu said Facebook was considering an initial offering, given its tremendous growth rate, but that it had no immediate plans to file to go public.

Gideon Yu did not immediately respond to voice mail and online messages. By: Brad Stone