In our recent post, Six Ways to Identify Poor PPC Campaign Management, the number one item to monitor was a daily budget that exhausted itself early. Budgets that run out of money too early exist in campaigns that have limited their click potential. Since you’re reading Two Octobers’ blog and you have an interest in SEM, you maybe sort of already know that but you might not be totally clear on the how or the why. Let us explain. We’re experts.
First things first, a lot of people are concerned with top visibility. Specifically, they either want the first position, or the first/second/third position, all of which not only occupy the top center of the Google search page but also have the most expensive costs per click (CPCs). People want these positions because they believe the traffic is better there, the ad more glamorous and the prestige endless; the truth is, the audience is the same but the click is more expensive. Yes, the 1-3 positions on the screen are more eye-catching, but at the end of the day, it’s the same ad with the same message, talking about the same product. Remember, the person that sees your ad in the fourth position has the same interest as the person that sees your ad in the first position, and they have the same engagement on your site and the same conversion. (If you don’t believe me, believe Google: Conversion Rates Don’t Vary Much with Ad Position).
So if that is true, why would someone vie for the top position? Why not pay less for the same click? To begin with, it’s a bidding system, which means someone has to be at the top. Secondly, it is to Google’s advantage to make the top position seem like a necessity. Third, there are differences in positioning: An ad in the first position gets noticed more and clicked on more frequently. The increase in clicks means the click through rate (CTR) increases and an increase in CTR should correlate to a decrease in CPC. Google rewards you for having a well-targeted ad that people click on. However, you are paying more for a top position ad, so the decrease in CPC may be negligible. The take away: ads in higher positions have a better CTR but usually still cost more.
Your strategy for ads in a lower position should be that they cost less and thus can drive more traffic. If you have a $100 budget for the day and an ad in the first position that cost you $5.00, you’re looking at 20 clicks for the entire day. If you lower your CPC to $2.00 and maintain the 5th position, you could drive 50 clicks for the day. That’s a huge increase in traffic.
I realize this strategy may be counterintuitive to what you know to be true (top positions for top ads!) but paying less for clicks will be worth it.