Adwords Sweet Spot Best Position

Hi consultant1027,

One of the most important lessons I have learned in PPC advertising is that there is no ad position that "generally" works best. There are so many variables in auction based bidding that it makes any generalization of ad positions an over generalization.

At one point I, like you, reasoned that a lower position would lower my cost per click, and it did. Back then I would adjust my bids, targeting position #3, and sure enough my CPC dropped. So with that perceived success I decided to test even lower positions. At position 5 my CPC dropped even lower and position 7 even lower and so on. I was very happen until I did further analysis.

Even though I was getting more clicks at a lower cost per visitor and even though I had significantly improved the cost per conversions the number of leads and sales had dropped by two thirds. This intrigued me so I decided to do more testing. I was pursuing the path of the highest ROI and making remarkable improvements. Yet, the more I improved the ROI the less money I made each month.

Eventually, I learned that seeking the highest ROI leads to the lowest possible number of sales. At that point you are spending practically nothing on monthly ad budgets and making practically no sales, and when you do eventually make a sale, it is at maximum profit possible, but one sale a month isn't going to keep the lights on. I needed a better strategy, one that didn't maximize profit per sale, instead I realized I needed to maximize profit per month.

Thus began my quest for "the sweet spot". I studied that data I had accumulated and looked for the overall ad position that generated the most profit in a single month. I randomly picked a few keywords from my data and calculated monthly profits for each ad position I had tested. They each had different sweet spots. So, I selected the 3 highest converting keywords and calculated the monthly profits for each ad position. Again, each had different sweet spots and they were all different from the previous three.

None of the six keywords had the same sweet spot, however I did notice a pattern. The higher the conversion rate, the higher the sweet spot was. So just to confirm, I calculated profit/position for another 300 keywords. What I discovered is that while higher conversion rates tended to have higher ad position sweet spots. There were many exceptions to the general trend.

I realized that the value of calculating the sweet spot for each keyword would give me the best ad position to target for each keyword. I also learned that targeting specific bids seemed to be an even more accurate method. But, the whole process seemed labor intensive so I began to look for better ways to do this through automation.

I developed programs that would pull daily data from all the AdWords accounts that I was managing and drop it into a database. I then wrote queries that processed the data and calculated the profits based on bid levels. This helped a great deal but it still took some time to test and zero in on the optimal bid level for maximum profit per month.

Over time I discovered that there were other people using similar methods of calculating optimal bid levels. And then one day I saw a video produced by Google's Chief Economist, Hal Varia. Turns out that AdWords had a built in a new feature that did the calculations for you, Bid Simulator, and introduced a new metric, ICC (Incremental Click Cost).

Here's that video:

With the use of ICC along with VPC (Value Per Click) it makes it easier to estimate and then zero in on bids that yield the maximum profit per month. Sadly, the Bid Simulator feature that Google built into the web interface only works with keywords that generate a higher volume of clicks. Fortunately for me, my custom solution could be adapted to use these new metrics without the use of that feature.

While you can try using a general ad position sweet spot, you need to realize that AdWords is an auction based system and as such is very competitive. If your direct competitors are calculating these metrics they will bid you out of the market leaving you only crumbs that may not be profitable to you unless you have a higher VPC.

Many folks that are new to PPC advertising have no idea how consistently you can double or triple the profit level of their campaigns, even when they have a higher VPC, merely through more advanced bidding strategies.