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An interesting "parallel ad" problem (I hope)
Algebrator




msg:1135858
 3:20 am on Dec 6, 2002 (gmt 0)

I have the following two ads running:
1. .....blue widgets....
2. .....blue widgets.... ($49.00)

Naturally the second one has lower CTR (1.5% as opposed to 5% on the first one). The 2nd one is my money maker; virtually no orders on the first one.
The common wisdom is of course to drop the first one. However, my keywords are extremely cheap (lucky me!), so I am losing insignificant amount of money on ad #1 - we can take that out of the equation.
What I gain from having the ad#2 is better overall campaign CTR which always puts me at the top among competitors. When I only have ad#2, I am typically at the third position.
What I lose from having ad #2 is the fact that ad#1 (the money maker) shows up only 50% of the time.
So the question is:
What is your gut feeling - is it better to be 50% in the first position or 100% in the third?
Obviously, this can be tested, but I don't want to do it
during the Christmas season - if I drop an ad, and realize that that was a mistake and then put it back on it will show up on AOL in about a week, and that is where most of my sales come from - don't want to lose that week.
Your insight is appreciated.

 

vitaplease




msg:1135859
 8:46 am on Dec 6, 2002 (gmt 0)

The 2nd one is my money maker..

and

ad#1 (the money maker)

not quite sure what you are saying. Could you clarify?

bird




msg:1135860
 1:30 pm on Dec 6, 2002 (gmt 0)

Sounds quite simple to me.

Ad #1 doesn't make any money, no matter the position.
Ad #2 makes money in position 3 (and probably in any other position), but currently only half as often as it could.

If you drop #1, then #2 will make you twice as much money than it does right now.

The only problem you might be facing is when #2 happens to fall below position 3, as it would then disappear from some of the syndicated sites, particularly AOL. But since the ads are rated and positioned seperately, this can happen in any case, so it shouldn't affect your decision.

Algebrator




msg:1135861
 3:00 pm on Dec 6, 2002 (gmt 0)

Vitaplease,
Thanks for pointing out the inconsistency -
the original post was really confusing because at some
point I switched ad #1 and #2. This is the corrected
version:

I have the following two ads running:
1. .....blue widgets....
2. .....blue widgets.... ($49.00)

Naturally the second one has lower CTR (1.5% as opposed to 5% on the first one). The 2nd one is my money maker; virtually no orders on the first one.
The common wisdom is of course to drop the first one. However, my keywords are extremely cheap (lucky me!), so I am losing insignificant amount of money on ad #1 - we can take that out of the equation.
What I gain from having the ad#1 is better overall campaign CTR which always puts me at the top among competitors. When I only have ad#2, I am typically at the third position.
What I lose from having ad #1 is the fact that ad#2 (the money maker) shows up only 50% of the time.
So the question is:
What is your gut feeling - is it better to be 50% in the first position or 100% in the third?
Obviously, this can be tested, but I don't want to do it
during the Christmas season - if I drop an ad, and realize that that was a mistake and then put it back on it will show up on AOL in about a week, and that is where most of my sales come from - don't want to lose that week.
Your insight is appreciated.

Algebrator




msg:1135862
 3:06 pm on Dec 6, 2002 (gmt 0)

Bird,
Are yous sure that "ads are rated and positioned seperately..."? To me it seemed that the introduction of
higher CTR ad "pushed up " the lower performing one. Of course, there might be other reasons that I am not aware of.

webdiversity




msg:1135863
 4:19 pm on Dec 6, 2002 (gmt 0)

If this is Adwords we are talking about (which it must be because it is in the Adwords forum), then the ads are shown in rotation.

If you remove the ad that is losing you money on clicks, then the extra money you can pay on the successful ad will result in better bottom line figures.

Are the two ads running in seperate campaigns or in the same group?

Unless you run them in same group and get your anecdotal evidence from consistent data you will always be second guessing because only Google knows how they rotate and show your ads.

Being popular (higher CTR) gives you the benefit of cheaper ads, due to relevance, but as long as you are prepared to pay a decent amount per click you should be shown in rotation with others (or so we are led to believe).

I'd put the two ads in the same campaign, get data over say a week and then decide.

bird




msg:1135864
 5:48 pm on Dec 6, 2002 (gmt 0)

Are yous sure that "ads are rated and positioned seperately..."?

I didn't test for that explicitly, but the language in the FAQ [adwords.google.com] clearly talks about "ads" being ranked, in contrast to "ad groups" (which would be both of your ads together):

5. How are ads ranked?

Your ad is ranked on the search results page based on a combination of its maximum cost-per-click (CPC) and clickthrough rate (CTR). The higher your CPC or CTR, the higher your ad's position. Because this ranking system rewards well-targeted, relevant ads, you can't be locked out of the top position as you would be in a ranking system based solely on price. Click here to learn how to increase your CTR in order to improve your ad's position without having to raise your maximum CPC.

In fact, your observation that ad #1 shows up higher than ad #2 clearly confirms at least the "positioning" part of that hypothesis, doesn't it?

On the other hand, if your CTR drops below 0.5% (resp. 1% for syndication), then they will disable the respective keywords for all ads in your ad group.

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