Archive for December 12th, 2008

Ad position

Friday, December 12th, 2008

If you invest in AdWords or other PPC programs, you probably like to see your ads in the best position possible. I have spoken to many people who set up their own ad campaigns and think that they should always strive for the number one ad position.  The justification that I often hear for this is that it gives more traffic and stops competitors from taking the top spot, therefore limiting their traffic potential.  Whilst there is some truth in this, it should not be a primary concern of anyone running a PPC campaign.

More traffic does not necessarily translate to more profit. PPC advertising is an investment, not a cost and this should never be forgotten.  For sales orientated campaigns, the focus should be on maximising profit margins and ROI, and high ranking ads are not always ideal for this.

Ads that are shown in lower positions in the SERPS, often result in a higher return on investment for two reasons.  Firstly, the CPC for your ad will be lower, and secondly your ads will be “pre qualified”.  To explain this second point, when people see PPC ads, they have a tendency to click on the first thing that appeals to them (often without much scrutiny).  The ads in position one and two get a lot of “impulse” clicks - people see these ads first, notice the ad title matches their query and click on the ad (often without considering the other ads, or even reading the entire ad text). Once they get to the site, they quickly realise that it is not quite what they were looking for.  While this is great for boosting Click Through Rate and getting traffic to your site, it is not great for maximising ROI.

Ads that are shown in middling positions are not so susceptible to these “impulse” clicks.  Instead, the people that click on these ads tend to be a bit more discerning. In all probability, they have scanned the ads above, and decided that yours seems to give the best chance at finding what they are looking for. Generally, in these positions, each click has a greater chance of converting into a sale.

Of course, ad position is just one factor that can affect ROI and profit margins.  If an ad is poorly written or is misleading in any way then profit margins and ROI will suffer regardless of where your ad shows. The point I am making is simply that higher ad positions should not be blindly coveted.  Instead, focus on ROI and try varying your bids and ad positions to determine which setup works best for your business.