Knowledge is the Foundation To Success  

We have learned, in PPC management, that there is a very strong correlation with your Ad Position on the page and your Click Through Rate (CTR).  In almost every case (I have to say “almost” for those exceptions that always exist), the higher the Ad Position, the higher the CTR.

However, conversion is an entirely separate issue.  Do not assume that just because a keyword converts at a certain rate at one ad position that it will only convert better if you bid it to a higher position.  In fact, that is probably not going to be the case.  And once again, we need to look at the intent of the search to understand why.

In general when a visitor clicks on an Ad that is positioned further down in the results page – sometimes even page 2 or page 3 – they are highly targeted and interested in what you are offering.  The key is to find the “sweet spot” where the CTR (which will be lower at a lower position) combined with the Conversion rate brings you the best ROI.

Of course there are always exceptions to every finding, but the higher positions tend to bring less targeted traffic for several reasons.

1. The searcher is testing out their query – Did they type it in correctly? Are the results even close to what they are looking for?
2. The searcher is just beginning their research process and will click on the first couple of ads just to get some high level information.  They may come back and buy later but they are not in the “buy” stage quite yet.

What is the best way to find out your Optimal Ad Position? Test! Every industry is different. Every keyword is different .  You will find out the most about your ad position and your conversion if you have installed Google Analytics on your website.  Google has some good information on their adwords blog on using the two tools together to optimize your position.

So you have your Google AdWords campaign budget set to $50/day and you are constantly reaching that spend level day after day.  Now what?  Of course, you could just leave it alone and continue hitting that threshold, thus having your ads taken offline in the middle of the day, or whenever that budget spend limit is reached.  Obviously, you could open the budget up to $100/day to accommodate more traffic, but that is not always a practical solution, especially if your PPC advertising budget is tight or if your company has an absolute maximum threshold that they want to spend every day.  So, let’s say that the $50/day budget is an absolute max spend level that you have to work with – what can you do now?

You can lower some bids.  Let’s say your average CPC is $1.00 a click, so you are getting an average of 50 clicks a day for your $50/budget.  However, this $50 is spent by noon, so your ads are nowhere to be found later in the day.  Let’s also say your positioning is anywhere in the 1-6 positions, so you have a good solid presence when your ads do show.  Now let’s say some of your click-thru rates are pretty solid, some above 5% or even higher.  You could lower some of the bids down on those keywords and often see a very minimal movement downward in position, but reap the benefits of a lower CPC.  If you get your average cpc down to 75 cents, for example, you will now get 66-67 clicks a day for your budget, whereas before you pulled your bids down you were only getting 50 clicks a day.  Even if your positions are lower, your ads will be showing longer throughout the day, increasing the chances that your ad will get noticed and bring traffic to your website.

Don’t be afraid to try some lower positions, especially if your are constantly hitting your budget threshold.  You may be surprised at the volume of increased traffic your campaign sees just by moving down a single spot because the lower CPC is allowing more totals clicks to come in.

I have clients that are absolutely convinced that the number 1 spot is the best place to be, and no amount of data can convince them otherwise. We call that “Ego Bidding” and it can be absolutely detrimental to PPC advertising.

Now don’t get me wrong. Number 1 can be a good place to be. But counter to popular belief, it can get you less business, not more, besides being potentially more costly and hard to maintain in a competitive marketplace.

I have one client who wants to be in number one on some very generic terms, no matter what the cost. What usually happens is this: I get a call to boost the bids to get in the number 1 position on their special terms. I raise them, they land in number 1, they spend almost two or three times what they spent for position three or four, get the same or even less conversions, and then I get a call that we spent too much money and I have to reduce the bids. Two months later, I get the call to boost the bids again, and the scenario repeats. Every time I get the call, I remind them that we’ve been down this road before, and every time they tell me to do it anyway.

I have another client who only has ego bidding issues on only one search term. This particular client is in a very specialized industry with a very specific product in a very competitive marketplace. With them, the ego bidding is driven by the board of directors. If one of the board searches on this key term and they aren’t in number 1, I hear about it immediately. It doesn’t matter that their cost per conversion could be over $200, or that CPC is over $10. As long as they are in position 1, they are happy and they deem PPC successful.

I’m not opposed to trying out the number one spot, but only if a client has conversion tracking (or some other way of tracking that keyword), so we can see without a doubt whether it gets them more business or just spends more money.