The Importance of Testing Various Ad Positions in Google AdWords

One of the main optimisation techniques used at SponsoredLinX is to measure the results we get at various ad positions.

Google uses an algorithm to calculate which position an advertiser’s ad will appear.

Max Cost Per Click (CPC)  x Quality Score = AdRank (AR) The higher the AdRank, the higher you are listed.

To get the actual CPC we user the AdRank of the advertiser below us and divide this by our Quality Score.

Let’s take a look at an example of how this kind of bidding landscape can look.
Advertiser A     Max CPC $1.80   QS10    AR=18        Actual CPC $1.68

Advertiser B    Max CPC $2.10    QS8     AR=16.8    Actual CPC $1.13

Advertiser C    Max CPC $3.00    QS 3    AR= 9        Actual CPC is Min Bid Required

If advertiser A drops his max CPC by $0.20 we get the following;

Advertiser B    Max CPC $2.10    QS8    AR=16.8    Actual CPC $2.00

Advertiser A     Max CPC $1.60    QS10    AR=16        Actual CPC $0.90

Advertiser C    Max CPC $3.00    QS 3    AR= 9        Actual CPC is Min Bid Required

Advertiser A made quite a small change but he has changed the auction in a big way. They have dropped from an average position of 1 to 2 but are saving 46% on their CPC’s, a statistically significant saving. Not only do they save a lot on their CPC’s, they have made advertiser B pay a lot more, 77% more…

As they we willing to pay a Max CPC of $2.10 their AdRank is now higher than advertiser putting them at an average position of 1. If this advertiser was already close to hitting their daily spend limits it is likely that they will exhaust their budget earlier in the day, taking them out of the auction until they either increase their daily spend limit or reduce their Max CPC’s.

By using this technique, we test and measure against position and try to hit the sweet spot to get the best ad positions at the best possible prices.

If you need some help getting the most out of your AdWords account, give us a call. We have some of the best AdWords brains in the country and can help you improve your account ROI.

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