CTR plus CPC

Is the CTR calculated on each Keyword?

[bigace]

I have tried to find the answer to this question but I must be stupid because I have failed to find it.

I know that the CTR and the CPC are added together in some fashion to decide how high your ad is placed in the Adwords list. Here is my stupid question:

For a particular Keyword search is the CTR of that particular keyword used or is the average CTR of the adgroup the keyword is in used to determine where your ad is placed.

This matters because obviously some keywords in an adgroup have CTR higher than the adgroup average, some lower.

[JustTrying]

Kevin Lee from ClickZ said:
...the Google AdWords system displays ads in the order of the effective CPM of the ad rather than that of the maximum specified CPCs. This means the ads with the highest effective CPM are placed in heaviest rotation, maximizing revenue. For example, an ad with a 4 percent CTR and a $0.25 CPC ($10 CPM) will rotate into higher positions than an ad with a $0.35 CPC and a 2 percent CTR ($7 CPM). The higher CPC does not get better placement.

[webdiversity]

Maybe it's me, maybe it's late. but I am inclined to disagree. If you pay a higher CPC than you are already bidding then it will have an effect on your placement.

I've tried to explain that the aim of Adwords for Google is to obtain the same amount of money from each advertiser, either by rewarding the better written ads with more prominence, or if the ads are poorly written to expect more money for those to take a higher spot. In my opinion the focus should be on writing better ads, not paying more money.

I guess you could liken it to a handicap horse race, where the object of the exercise is to have a 10 horse dead heat. Each horse will have a weighting designed to penalise/reward it for it's past performances.

Each keyword in each group in each campaign has it's own CTR, the entire account is used to ascertain if you have to pay the $5 penalties for writing bad ads.

[hannamyluv]

I think that what he is asking is wether the placement is determined by the total CTR for an ad used or is it determined based on each keyword. In otherwords, If I have a CTR of 4% X (CPC) .35 overall on an ad but 6% X.35 on "widgets", 2% X .35 on "spockets" and 1% X .35 on "cogs" which are the keywords of the ad, does the ad get placed based on the 4% or on the 6%, 2% and 1% respectivly.

I don't have an answer that comes from them but since the guys at G are pretty smart, I would guess that it is based on keyword, that way they would get the most money.

[bigace]

"hannamyluv"
Yes, you figured out my question. My guess is the same as yours but I was hopeful that someone knew for sure. I am new to adwords and I don't want to spend a lot of time tweaking the individual keyword CTR and then find out that it was really the average CTR of the adgroup that I should have been working on. Does anyone know for sure?

I couldn't find a definite answer on Google. Every answer is always that "you need to work with the CTR of your ad." Since the same ad is used for all of the keyword in an add group do you work with the average CTR of all of the words using that ad in the adgroup?

[hannamyluv]

Well, really, if you worked on the individual keywords, that would raise the ad's CTR as a whole, so you can't be hurt by it.

[JustTrying]

Really interesting discussion :-)

I would be really curious to hear other people's answer to this question, but I have to believe that "effective CPM" of each ad must be strongly factored in to ad placement (personally, I don't think that Google is looking to make the same amount of money from each advertiser, but rather to make the highest possible "effective CPM" for the keyword -- which is why there is such emphasis on "improving CTR through enhancing ad copy").

[vibgyor79]

For a particular Keyword search is the CTR of that particular keyword used or is the average CTR of the adgroup the keyword is in used to determine where your ad is placed.

It is the keyword CTR that matters and NOT the AdGroup CTR (or the ad copy CTR or the campaign CTR) when it comes to deciding the ad position.

Why?

Because it would be unfair to use, say AdGroup CTR, because you may have only 2 keywords in an AdGroup while your competitor may have 5 keywords. If your competitor having 5 keywords manages to get hold of a high-traffic/low competition keyword and inserts them into the adgroup, his/her adgroup CTR may shoot up.

AdWords system will not "penalize" you for not discovering this high-traffic/low competition keyword. The ranking of your ad is always "comparative" - hence it takes the keyword CTR.

Makes sense?

AdGroup CTR/Ad Copy CTR/Campaign CTR numbers are mentioned so that you get an overall picture of your campaign performance.

[bigace]

vibgyor79: Thank you for that good answer. That was one of the reasons that I wanted to know how it was calculated. If it is the adgroup average that was factored in to determine the position, I wanted to place the high traffic/low compitition words in certain adgroups as needed to increase the average CTR. If it is the keyword CTR then there is no reason, that I can think of, to work over these adgroups in this manner.

Based on this information, have you found any reason to move certain keyword around from adgroup to adgroup? I wonder why Google Adwords even bothers to give you an adgroup average.

I know that if overall campaign CTR is too low there are consequences, as well for the individual keyword CTR, but are there also consequence for low adgroup CTR? There is nothing about it in Google FAQ, that I could find.

[vibgyor79]

>>> have you found any reason to move certain keyword around from adgroup to adgroup?

With the introduction of powerposting feature (that allows you to set max CPC for each keyword), it is not required to move keywords around from one adgroup to another for the sake of grouping similarly priced keywords.

However, it is recommended to move the keywords around so that similar/related keywords are placed in one AdGroup (with the ad copy "reflecting" the keywords in the adgroup). This will reduce the amount of work you need to do, improves individual keyword CTR and hence your average position.

For example, check out the adgroup with the following ad copy -

Widgets for Sale
Discount sale of red, blue
and green widgets. Order now
www.widgetcentral.com

You can improve your CTR by including/moving the following keywords in/to this adgroup since all the selected keywords are highlighted when surfer searches for the keyword -

widgets
red widgets
blue widgets
green widgets
discount widgets

and so on..