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> I've tested their ads
You should never do this. You should be different. Besides, doesn't mean you'd get the same results. Why would I click on one ad or another if they are both the same?
> the domain name is an exact match for the keyword
> Are you sure quality score gets calculated on the a per ad basis?
Positive. Remember I said the ad-keyword, not just the ad. Yes, QS is shown at keyword level. But think about it logically. Which has the most influence, the keyword or the ad? You can test this out.
the ad with the lower CTR is the better performer
It can happen but in your case, no. I also don't understand your logic and calculation.
The CTRs have a difference of almost twice the rate. Unless the lower CTR ad has a conversion rate of twice that the first, then they are similar ROI-wise. But you say they are identical. Therefore, you win twice with the higher CTR ad. It gets a higher QS which keeps costs down and competitors at bay. You also get more sales per visitor and therefore more revenues and profits.
You can post links here at WebmasterWorld but add a dot com to Lucid Web Marketing and check out my free ebook which goes into more details on how QS is calculated. It's basically a standard deviation calculation.
As I said, you want to be different, differentiate yourself. You may be right that the most prominent (ad on top) may be most likely to be clicked. But that means your ad must be more prominent. Then again, if they are next to each other, the tactic may backfire. Readers may think WTH and not click on any or click the second one. The point is, be smarter than your competitor and you have a greater chance at winning.
The message however is not or should not be in your domain but your ad.
Not sure if that's true. I guess if you're Walmart or some other well-known brand it can influence click rate. But brownmenshoes.com?
Yes, Ad 1 despite lower much CTR is the better producer with its much higher conversion rate, but not by that much.
Your case is the exception because of the much higher conversion. I guess I'd go with Ad 1. But I'd also test more ads, combining the best elements of both into one and testing other variations. That's really the name of the game. You may get a 20% CTR but with a conversion rate of 10% which would be better. Even 7% conversion at 20% CTR would be better. FWIW, I hardly ever use price in the ad but if it works for you.
> it is important to now how they operate, ie how good their ads are.
Yes, but not copy their ads.
> If they use a bad domain they are wasting a line (or a part of a line).
What you're saying is that Walmart is a bad domain and that they should not use it. Same for Intel, Barns & Noble and thousands of others. That Cosco should buy and use portableairconditioners.com for example because using cosco.com is a waste of a line.
> Let me me ask you this; Have you tried it?
No. None of my clients ever had something like that. Many have related words in their business/domain name such as XYZRoofing.com or BikerHelmets.com (they sell much more than helmets) or even bargainchildrensclothing.com who doesn't bid on "children's clothing". All are doing well.
So the question is, given the CTR on ad 2 is 65% higher (24.67% versus 14.90%) than ad 1 why is CPC only 7% lower?
If you want to keep this technical, and do some testing in order to get more "meat" for your further thinking and possible discussion, you may want to pause the ad with lower CTR and see what happens with the other one in regards of cost and other measurements. You also watch (note down) the QS for given keyword (or keywords). Then, you may want to do the same thing otherwise (pause better performing ad) just for the sake of testing, and again, note down QS and other numbers. Then compare all what you have (1 against 2), plus all to what you already have.
> It looks like your ad with the price mentioned "scares" away people
I agree. It also prevents people from seeing your sales message. There's a reason price is always mentioned last. You want to make your pitch and persuade the potential buyer that your offer is better than others before springing the price on them, not make a decision based on price but features and benefits. Test other ads without price.
Also I see your both ads get served closed to equally. What are the settings on your campaign level for how ads are delivered: standard or accelerated?
That may help you get more info through the performance data for your fine tuning and chase for better price per click when about ads.
In other words, if you're on standard now, accelerated may serve the better ad more which may finally reduce price per click more than now. Not a rule but my guess something like that could happen. Then you check your ROI and figure what works better for you.
Just my point. You are preventing people from knowing about quality because many, probably knowing they can get it cheaper, don't click your ad and read your copy. In my mind, you are putting the cart before the horse. Try different ad copies without mentioning price.
Why expect the CPC to change for the same ad?
You should see a change in QS unless both ads have the same one. I doubt that's the case since one ad is so much superior to the other, unless your QS was 10 to begin with.