What a great resource for businesses (and agencies) looking to get their head around Twitter and its relevance for business, both large and small.
The business centre is categorised into easy to follow sections including:
A recent eye tracking study released by User Centric comparing Google versus Microsoft’s recently released Bing search engine got me thinking about the importance of ad position and how it relates to ad performance.
There are a lot of theories (read myths) about which ad position users are more likely to click on. Google caters to these theories by providing a Position Preference tool for those people who believe that users only click on the 1st and 2nd (or 5th and 6th) ad in the sponsored list. Instead of propagating more myths here are a few facts with you about ad position.
Fact #1 - Ad position is determined by what Google refers to as your Ad Rank. Your Ad Rank is determined by your keyword’s cost-per-click (CPC) bid times its Quality Score.
Quality Scores are dynamic and are calculated by Google every time your keyword matches a search query. Google use a number of factors to calculate your keyword Quality Score including (but not limited to) ad relevance, landing page quality, relevance to the search query and your overall account performance.
According to Google, the main contributor in calculating your Quality Score is the historical clickthrough rate (CTR) of the keyword. Google also factor in the actual ad position to weight the CTR of the keyword where higher positioned ads get lower weighting on their historical CTR. This is based on Google’s own research that ads with a higher position achieve better CTRs.
Fact #2 - The best ad position for your ad is the one that gives you the best return on your investment.
Let’s say for example I am one of ten advertisers all bidding on the same keyword and for the purposes of the example all ten advertisers have a Quality Score of 10/10. Two of the advertisers have a max cost-per-click (CPC) of $10 and the other eight including myself have a max CPC of $5.
I’m currently hitting my cost per sale target of $20 by achieving a 25% conversion rate from the paid traffic I’m receiving from my Adwords campaign.
I want to increase sales volume and believe that achieving position 1 will probably increase my CTR. I increase my max CPC bid to $10. Regardless of how much more traffic I receive I now need to double my conversion rate to 50% to keep the cost per sale the same.
If my conversion rate stays at 25% then doubling my max CPC will also double my cost per sale to $40. Can my business afford this increase?
Fact #3 – The only way to improve your Ad Rank is to increase your max CPC bid or increase your Quality Score.
Increasing your max CPC bid is easy but before you do, go back and read Fact #2. Is this really the best option for your business?
Make sure that you have taken the time to calculate your target cost per sale and work backwards from there to determine just how high your max CPC bid can go before you start eating into your margins. (Be sure to check out Traffika’s free downloadable ROI, CPA and LTV calculators.)
Improving your Quality Score is a whole series of blog posts you can look forward to, but in my experience one of the easiest ways to increase Quality Score is to improve the relevance of your ad to the keyword. Increasing ad relevance not only improves your Quality Score it also improves ad performance (which also increases it’s Quality Score). Which leads us to our fourth and final fact…
Fact #4 – Users will click on the ad that is most relevant to them regardless of the ad position
OK so maybe this isn’t a fact as such but it’s certainly common sense and supported by Traffika’s own clients Adwords performance data where ads with an average position of 6 are achieving CTRs and conversion rates just as good (and sometimes better) as an ad in position 1.
Why? Because we take the time to understand our clients’ target markets. We create tightly themed ad groups and ads to ensure that the ads are extremely relevant to the keywords and actual search queries used. We use negative keywords to further pinpoint the right searchers at the right time. We include strong call to actions and highly relevant terms in ad copy and we take every opportunity to optimise our client’s Adwords account performance at all levels.
To summarise, don’t get hung up on making sure all your ads appear in position number one. You are much better focusing your efforts on achieving your ROI goals by creating ads that your target market wants to click on. Make sure that you reach those searchers in the most cost effective way that you can.