How are Conversion Rates Effected By Ad Position?
What I love about PPC marketing is there are so many things you can test to increase (or decrease) the overall impact on sales, leads or goals for a client. Today, Google and it’s Chief Economist, Hal Varian released some very interesting data regarding how conversion rates are affected by the position of an ad. The finding – acutally quite supprizing is that the conversion rate itself doesn’t really change across position 1 – 10.
Before you run off and set your position preference to position 10 and think – “Yes, I’ve found the secret to cheap sales” – think again.
Lets start at the basics – A “conversion rate” is different that an actual conversion, the rate is merley a measure of the conversions divided by the number of clicks. It is widley accepted that a higher position on the page garners more clicks (and it usually means a higher CTR also) – thus, with more clicks will come more conversions – just at the same rate as an ad in a lower position (according to this study).
To throw a monkey wrench into this – the report does highlight this fact:
Since Google ranks ads by bid times ad quality, ads in higher positions tend to have higher quality and higher quality ads tend to have higher conversion rates. Thus you may see a correlation between auction position and conversion rates just due to this ad quality effect. However, the real question is how the conversion rate for the same ad would change if it were displayed in a different position.
When Google applied a statistical model to account for the effects that their ad service system applies for situations illustrated in the above quote, they found that for the 11 ads shown on the first page, the conversion rates varied by less than 5% across the position ranges. Additionally, ads that placed above the organic search results had a conversion rate that ranged ±2% of right-hand side positions.
What does this mean for the every day advertiser like yourself? First, remember that CTR is a part of the Quality Score calculation and where your ads are placed and what you pay per click. Thus, an ad positioned low in the first page will likley have a low CTR unless the ad text has some amazing offer/call to action etc.
Secondly, remember that if your goal a positive ROI then the way you manage your campaign will include the cost of the clicks – thus, a lower position might be beneficial for you – now that you know that conversion rates don’t vary much by ad position.
