Years of experience and managing millions of dollars in spend has given me insight into how average position can positively or negatively impact your bottom line, and I often see businesses doing themselves a disservice. Google claims that a higher average position increases conversion rates, thus increasing return on investment, but this is contrary to my experiences and logic. Here at Visiture, we typically find that a higher average position can actually decrease your ROI. Here’s why:
1. A higher average position comes at a cost – a higher cost per click (CPC) and the top position comes at a huge premium.
2. A higher position doesn’t always translate into a higher conversion rate.
Look at it this way: a higher position is likely to get more impulse clicks, thus decreasing the conversion rate. Google and others will claim that a higher average position actually gives you more authority, meaning that users will trust your site more and thus convert at a higher rate. While this might be true on some sites and some keywords, there are simply too many on-site and off-site factors governing the outcome. Some of these factors include the landing page being relevant to the keyword, optimizing the conversion funnel, competitive pricing (if selling a product or service), and aggressive promotions.
Obviously, each account/campaign/ad-group will have its own nuances and goals, but a general rule of thumb is to target for average position of 2.0 – 2.2. If you have good ad creative, this position can get a favorable CTR. And the CPC is typically much lower than targeting average position 1.0. While the volume won’t be as high as the top position, the ROAS will be higher and the CPA lower.
Google Adwords offers automated rules to assist with systematically targeting an average position. You’ll need to get creative, but it can be done successfully.
You could potentially set two automated rules:
Rule one example: Decrease bid to make position worse than 1.7.
Rule 2 example: Increase bid to make position better than 2.3.