PPC Positioning.

July 31, 2007

When we take over in house PPC accounts, we often find that clients have structured their PPC campaigns so that they’re ads are appearing in #1 spot in the sponsored listings. In general terms, this is because they have decided to set a Cost Per Click higher than any of the other advertisers. The thinking behind this strategy is that they will receive the most sales and the most revenue than anyone else who is bidding on the same keyterm (s). At the end of the day PPC is an online auction of advertisements and it is an entirely laudable notion that one would want to win the auction and be top of the pile. And of course it is true to say that with comparable ads, the #1 position will gain significant more traffic maybe upto 40% than position 2. But you should consider how much more will you have to pay for position 1 then 2 or, position 3 than 5?. In competitive industries with tight profit margins some advertisers may not be able to afford to be visible in the top three positions.

Another thing to consider is the conversion rate of the traffic that is sent to your site from PPC. It has been suggested that those who click on the top ad have not perused the results pages carefully and are in effect blindly “impulse clicking” on the first related ad they see or maybe they are simply browsing and so are not intending to make a purchase. Those who click on position 4-9, it is argued, have taken the time to read all the ads, all the prices, and are much more likely to purchase when they click through to your site. Like anything however, it s horses for courses and their are differentiations between search engines, for example according to research done by the Atlas institute the lower ad positions in Overture have a much lower click through rate than the lower ad positions in Google Adwords. Moreover, it is also important to consider what you are selling. If something is a low cost or neccesity buy, maybe a spare part to repair a car, users maybe likely to buy the first product they come accross as they are anxious to get the product quickly, so being in position one or two may yield a higher conversion rate in this instance.

In conclusion ad rank and Click through rate are important but a good PPC account should be driven by nothing apart from ROI.

Simon
Campaign Executive