There are two marketing strategies that are at odds with each other when designing a PPC marketing campaign. It is possible to design a campaign to focus on promoting branding or on optimizing for clicks. In almost all cases you can not focus on both. It is unfortunate then that many businesses and online marketers forget the difference.
Ad position is calculated from your ad’s AdRank every time a user does a search query as part of the AdWords bidding system. AdRank furthermore is calculated from your ad quality, your bid and any extensions you may be using. Ad extensions, although contributing to your AdRank, does not play a core role in its calculation, so we will not be focusing on it here.
Ad quality is calculated from a variety of factors, listed on Google’s AdWords support page. These include:
- Your keyword’s expected click through rate
- Your display URL’s past CTR
- Your account history
- The quality of your landing page
- Your keyword/ad relevance
- Your keyword/search relevance
- Geographic performance
- Your ad’s performance on a site
- Your targeted devices
Once your account has been optimized for ad quality, which each and every account should go through, only one variable remains. Your bid amount. Ultimately your AdRank is calculated from multiplying your ad quality by your bid. This does mean that it’s possible to gain better ad positions for lower bids if your competitors have not optimized their campaigns. However you should expect that your competitors are at least on par with you in terms of ad quality.
So now we are presented with a choice. We can adjust our ad position by adjusting our bid. Which one is our goal?
You can choose the best ad position and stay within your budget but then only achieve a relatively meager amount of clicks. You could optimize for the as many clicks as possible, but then should not expect to be featuring close to the top of the page. Finally, you could aim for many clicks in the top spot, but then you will blow your budget in no time.
Thinking having your ad served near the top spot of Google’s search results page to be a successful campaign strategy may be misleading. As long you are reliably exhausting your daily budget then there is a margin to decrease your bids and attain more clicks.
For businesses that have a clear link between clicks and conversions, like most shops driving product sales, finding the sweet spot between average cost per click and return on investment should be paramount.
On the other hand if a business wants to establish itself as a household name, or just ensure that its name is present on particular keyword searches, then bids should be adjusted with that in mind.