Position Vs Profit

[Paul_AMS]

Does anyone have any stats regarding ad position versus conversion rate or ad position versus profit?

Everyone knows the formula AD RANK = CPC BID x QUALITY SCORE.
So quality score is mainly based on CTR and CTR is mainly based on ad position. Therefore those at the top can pay less per click than lower positions.

There is no doubt that conversion rates are much higher if your ad position is higher. But does anyone have a formula for ad position versus conversion rate or ad position versus profit?

I have run hugely profitable campaigns by bidding high to obtain a high ad rank which gave me the high conversion rates and relatively low average CPC but I haven't got a formula, only gut instinct.

[buckworks]

So quality score is mainly based on CTR and CTR is mainly based on ad position

There is also a correction applied for position, so that getting a better CTR just from bidding high is not the whole story.

If your ad is showing low on the page, but its CTR is better than average for that position, the quality score formulas will notice that and give credit.

no doubt that conversion rates are much higher if your ad position is higher

That can vary in different sectors so it needs to be monitored. Some campaigns do well by always bidding for the top position, while others do better by bidding a bit lower and letting the top guy pay for the curiosity clicks.

[RhinoFish]

There is no doubt that conversion rates are much higher if your ad position is higher.

Mom always said i was exceptional.

[LucidSW]

Quality Score is mainly based on CTR but that's _relative_ CTR, not absolute. This is basically what Buckworks said, a correction, normalization in math speak. In other words, seasonal effects but in this case, it's positional effects.

As for conversion rates, the same is often true: your conversions are higher the higher your ad. Best way I heard it explained is "first position ad gets first crack at making the sale". I got lots of client data to show this. Since first position gets higher CTR and conversion rate, it's the best ROI. The CPC is often lower too.

[RhinoFish]

[adwords.blogspot.com...]

[LucidSW]

Well I like playing with numbers and have lots of data so I checked my own after reading that link provided by RhinoFish. It's an interesting article but I totally disagree.

At first, I simply compiled data from all clients that track conversions. I did not take into account anything else hence my statement in my previous post.

That article is two years old. I did the same calculation by year. In 2009, there is great variations in conversions by position. I don't have as much data as Google has - enough however to be significant - but the percentages from first to fifth position were 3.06, 3.62, 3.12, 2.62 and 3.18.

In 2010, conversions were 3.48, 4.47, 3.20. 2.57 and 2.17 and so far this year there's a drastic change although explainable: 1.64, 0.72, 0.75, 0.89 and a hair under 1% in fifth. It's also for a much wider variety of clients as I didn't include the archive of past client for 2009-10.

>> the real question is how the conversion rate for the same ad would change if it were displayed in a different position.

Yes, that's the real question. So I did the same calculation for ads with at least 30 clicks in each of the top five positions. There were a total of 48 ads meeting the criteria in many different verticals. The conversion rates from first to fifth: 1.96, 1.45, 1.07, 0.91 and 1.11. The best rate was 2.06 for those same ads in the seventh position (total of 72 conversions at that position).

So I don't know how they came up with their conclusion that rates don't vary much with position. I don't see it. There is more than a 5% difference across positions, something mentioned in that article.

[RhinoFish]

since the CPC costs vary with position, i say the real question isn't CR alone, but CPA or ROAS.

often, if you're adjusting bids for ROAS / CPA, your lower converting stuff will be bid down intentionally, making it appear that a lower position corresponds to a lower CR, but it's likely a lower CR corresponds to a lower position (because you put it there).

your site will be a bigger determiner of CR than your position (for the same ad).

further, the other things you can segment, will, in many more cases than the position case, be a bigger determiner of your CR, and also your CPA / ROAS.

[LucidSW]

> your site will be a bigger determiner of CR than your position (for the same ad).

True, more precisely the landing page, not the site. But the LP was the same. So obviously, all being equal (landing page and ad, which is what my last compilation was), the positioning has some sort of effect. As I said earlier, those at the top have first crack at making the sale and will convert more often.

You're right of course that it's not CR alone, ROI as well has to be taken into account. But CPC doesn't vary as much as most think across positions, at least not in my data. And since CTR grows more exponentially than the CPC, the few extra cents for the few extra percentage in CTR is worth it, even more so if CR is stable across positions, a lot more so if as I believe the CR is higher in upper positions. In other words, my conclusion is that you want to be at the top to maximize revenues and profits.