Adwords Positioning: CPC vs CTR - which is more important?

Comparing the two factors that affect AdWords positioning.

[PeiteTaOla]

Google says that your ad's position is determined by two factors: maximum cost-per-click and your ad's actual clickthrough rate.

I was wondering if anyone has estimated the importance of each factor.

I mean if an ad has a maximum CPC $0.30 and CTR 1% and another has CPC $0.10 and CTR 5%, which is displayed first?

[johannes]

PeiteTaOla, welcome to webmasterworld!

Multiply the cpc and the ctr!

CPC $0.30 and CTR 1% -> 0.30*1=0.3
CPC $0.10 and CTR 5% -> 0.10*5=0.5 -> higher rank

I think I have read this in the adwords faq at google.

[PeiteTaOla]

Thanks Johannes!

[PeiteTaOla]

Adwords FAQ says "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."

It doesn't clarify that they are multiplied. Of course, this is a logical thing to do, but it could be something like CPC*CPC*CTR in order to give more importance to CPC. However, if somewhere it is stated or found that they are just multiplied, there is no need to search it further.

[MrSpeed]

CPC*CPC*CTR in order to give more importance to CPC

I don't think there's a need to give more importance to CPC.
CPC*CTR = googlewin$ It doesn't matter which one is higher.

I do think The CTC does have to be fudged with a little though.

A brand new campaign with no clicks is multiplying by 0 which of course equals zero. If I increase my bid amount to a competitive CPC you do increase your position, even though your still have zero CTR.

I think at first CTR is guessed and then once you get some clicks it starts to mix in actual CTR.

[olderscot]

If you look at the adwords program overview page they state quite clarly that the ranking is CPC x CPR.

Mike