One word that comes up a lot in the world of SEM is optimization. Heck, “optimization” is the “O” in SEO. From a PPC Analyst standpoint, I strive to achieve optimal results for my clients paid search accounts. While I love to see my clients ads at the top of paid search results, sometimes achieving an average position of one isn’t all it’s cracked up to be. Sure, different campaigns have different objectives and there is variance from industry to industry. Truth be told, an average position of one is not always the most cost-effective position and there are other things to consider.
Search metrics often affect each other to form an ecosystem. For example, ad position has an effect on click-through rate (CTR). If an ad is position six, it’s generally going to have a lower CTR than an ad in positions one through five, regardless of how compelling and relevant the ad. Most people won’t even read six ads before clicking. Some people might click on the top ad assuming it’s the relevant ad without more than a glance.
While there are multiple factors that influence ad positioning and ad rank, higher ad positions usually equate to higher costs per click (CPCs) than lower ad positions do. Sometimes the difference in average CPC between ad positions can be huge. Ad position one also generally suffers from lower conversion rates and higher costs per acquisition (CPA) than some other ad positions do.
So what are some situations where it’s better not to be in position one?
Imagine you are running a campaign that is on a set budget and you are consistently seeing the campaign hit its daily budget early in the day with an average position of one. In this case, there is clearly enough traffic that you could hit your budget without being position one. As position two through four would generally have lower CPCs than position one would, you’d likely see more clicks for the same budget than you would if you were getting an average position of one. Furthermore, your CPA and conversion rates would likely go up because you would be eliminating some of the less relevant traffic that ad position one can attract.
Given that ad position one is generally less cost-effective than lower ad positions, when should I try to be position one?
Branded campaigns should usually strive for top ad positions when people search for their brands. Even if they are ranking well organically, consumers feel more confident in a site when they see it ranking well in the paid and organic listings than seeing the site in the organic listings alone. Furthermore, ranking on top for your brand pushes down your competition. Fortunately, if you are running a brand campaign you’re likely going to get high quality scores, which will lower the CPCs necessary to achieve top ad positions.
There are plenty of other situations where striving to achieve an average position of one at the campaign level is a good idea. If your campaign is consistently struggling to hit its daily budget at an average position of three, then you could definitely consider bidding more aggressively to reach positions two or one. Of course, there are multiple ways to approach paid search situations like this. Furthermore, sometimes the difference in CPC between positions two to three and position one can be negligible depending on many factors.
All industries are different and not all situations are the same in the world of paid search. It’s beneficial for PPC analysts to understand the pros and cons of achieving top ad positions. In PPC, it is certainly never black and white.