All search engines use a quality score as a parameter in determining the relative ranking of your advertisement.
The quality score is based on a number of factors, the most important of which is relevance. By relevance we mean how closely your keywords match both your advertisement and the webpage on which you are selling your product, often referred to as the landing page.
If we take Google as an example, the quality score is a measure of the following: clickthrough rate (CTR), account history, historical information on CTRs of other ads in the same sector as yours, quality of the landing page, keyword relevance, geographical considerations and what it describes as "Other relevance factors"
Higher CTRs will be achieved if your keywords are directly related to your product. This is because nobody will click on your ad if it appears on a search page that is looking for something entirely different. Highly relevant keywords will achieve high CTRs.
Keyword filters may also be used to reduce the likelihood of your ad appearing in non relevant searches.
Yahoo also uses quality metrics. This similarly uses the ad's CTR and its anticipated CTR with respect to the CTRs of other ads appearing in the same search; however they are less specific about landing page quality. They simply say that they use various relevance factors without disclosing what they are.
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Microsoft has also introduced a quality index for ads. This certainly pays a great deal of attention to the landing pages which are examined both using algorithms and manually. The algorithms segment websites by markets and types, identifying sites that provide poor and misleading information and services. The detailed functioning of the algorithm and the criteria it uses is again clouded in secrecy.
It is apparent that if you are involved in PSM then you cannot get away with low relevance ads and low quality landing pages. Sticking to the guidelines of the various service providers is likely to yield the optimum results along with the lowest cost.
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