Which is the best position for your AdWords ad? Most would clearly vote for the first position. We argue: it depends.

The first position clearly has two advantages: Firstly, the ad displayed at the first position gets the most clicks and it is placed even above the organic search results. This can be helpful since countless users still don’t know the difference between organic and paid search results. Secondly, when applied correctly, the first three ads displayed acquire more space than the organic results.

In fact, if the campaign is about branding or market dominance, it is advisable to run for top positions.

The advantages of lower ranked positions

Still, sometimes it can be better to run for the positions 4-8 of the search results. Usually, users who click these positions are significantly more motivated since they didn’t just click on the fist ad displayed but scrolled down in order to find the most relevant ad.

Although these lower positions acquire fewer clicks, the conversion rate, which is the percentage of users who actually become clients, is much higher. Hence, this strategy can be of special interest for smaller companies with a lower budget available. This strategy uses the positioning of the ad as a kind of filter: instead of competing for the most clicks, it is better to hunt for the few really promising clicks.

To give an example: a small online shop sells olive oil imported directly from Greece. It is labeled “fair-trade” and “100% organic”.

Still, on the Internet, this small brand has to face strong competition since REWE and Amazon also try to advertise for their own olive oil products. Obviously, a small shop is not able to compete with international companies.

Furthermore, the strong competition further increases the price per click. The first positions are therefore quite expensive – although the conversion rate is not very high. For the small olive oil seller, a new customer acquired by an ad displayed at the first position would cost approximately 17 €. This is actually more than the average olive oil product costs. In this example, the first order of a new customer would be a losing deal. Also, the per-day budget would be fully spent after only two hours.

A conversion from an ad displayed at position 6 only costs 4€. It is cheaper and has a better conversion rate.


Influences on the quality score

Someone might argue that fewer clicks have a negative influence on the quality score and could harm the whole AdWords account. This is definitely not right.

The quality score consists of three components: Relevance of the ad, landing page and Click-through-rate (CTR). The better these three factors, the easier a higher position can be reached at a lower price.

Still, it has to be mentioned that Google suggests to new accounts to compete for top positions in order to gain a higher quality score in the beginning. Still, in practice, the influence of CTR on the quality score has to be put into perspective. Google indeed also takes the positioning of an ad into account rather than only measuring the bare clicks. Therefore, the CTR is not measured in absolute numbers but in relation to the ad position.

For example, if an ad displayed at the first position gains a CTR of 10% but Google would expect a CTR of 15%, the quality score of the ad would slowly decrease. On the contrary, if an ad displayed on position 5 gains a 5% CTR but Google only expects a 2% CTR, the ad appears more successful and could even be able to achieve a higher position.

It is therefore not all about reaching the highest position possible. Every project has its own ideal position on AdWords. This position is called “sweet spot” and means the most benefit for the budget invested. It is possible to estimate this sweet spot, still, testing is highly recommended in order to define the perfect position.

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