Are Top positions on Google Adwords worth spending on?

Very frequently, customers will ask for their ads to be shown on the top positions on Google search results.  Why?  For the simple reason that most people will think they get the most clicks, and nobody really clicks the ads at the right.  How true is this?

Top 3 ads get 65% of clicks on ads

According to a study by SmartInsights in Nov 2013,  the top positions on Google ads receive average 65% of paid clicks, with the top ad getting 35% of all the clicks on paid ads.   That means the top positions on Google ad gets over 6 times than an ad on the side.  Heres a graph to show the click through rate (probability an ad gets clicks) at various ad positions:

Click through rates at top positions on google

 

So if we want maximum exposure for an ad, we will definitely go for the top ads if not the top positions on Google ads.  Some customers site brand exposure for this reason too.  With sitelinks, the top ads get even more real estate on the search results page:

sitelinks on top positions on Google ads

This is a sample of what we saw in an account we are managing, with the ads at the top positions on Google ads getting 7.5 times (3.9% divide by 0.52%) higher probability of being clicked than an ad at the side:

Top vs Other CTR on google

 

Can i get all my keywords to Top positions on Google?

Now of course you can, but in most cases we have a budget to work with hence a tradeoff is needed.  If getting 10 keywords to rank on the top positions on Google uses up all the budget, other keywords will have to reduce exposure.  Or if the budget is evenly used up by the keywords, we will not be able to see the ads all day or in the hours the ads are scheduled to display.

As Google Adwords on Google search only runs on pay per click, once ads receive clicks and use up the entire budget the ads will stop showing since Google Adwords guarantees that daily budget will only be exceeded by max 20% e.g. if daily budget is $100, maximum spending per day will be capped at $120.

How to choose keywords to get to Top positions on Google Adwords

The good part with online advertising is that we are able to track the number of enquiries received easily, as opposed to radio/tv/print where you might need different promotion mechanics to identify which are the channels customer are coming from.

If you are not currently tracking whether your ads are generating you customers, you really should because this is where we make the fullest use of the trackability of online advertising.  No problem if your users call you over the phone rather than sending you enquiries, call tracking (more of this in other posts) can be used to track the calls that resulted from the advertising.

I am sure you will have guessed by now that we should choose the keywords that gives the highest NET margin.

Keyword Cost per enquiry Conversion rate Cost per sale Revenue Net margin
1 $50 1 in 5 $50*5 = $250 $500 ($500 – $250)/$500 = 50%
2 $40 1 in 5 $40*5 = $200 $300 ($300 – $200)/$300 = 33%

# Conversion rate: How often an enquiry turn into a sale

# Cost per sale: Since 1 in 5 enquiries turns into a sale, the cost to get that sale is multiples of the cost to get an enquiry

We see that even though we need to spend more on keyword 1 to get an enquiry, it gives a higher net margin.  So if budget is constrained, we definitely want to get keyword 1 to top positions on Google ads because it gives better ROI (return on invested ad spend)

How to get to Top Positions on Google Adwords

To really simplify things, the key to this are:

  1. Improve Quality score of keywords:  Overall this means increasing the relevance of the keywords to the search query, the ad to the keywords and the landing page experience.  Your agency can manage the first two, which help to increase the Click Through Rate for the keywords as it is an useful gauage of relevancy to Google.  It is in everyone's interests (consumer, advertiser and Google) to serve relevant ads so consumers get useful ads, advertisers find relevant audience, and Google gets their ads clicks and earn their money.  For the landing page experience, your IT team will need to help make changes to your website to make the content as close to what the user is searching for as possible (and other factors like speed of loading the page)
  2. Increase the bid of the keywords: If you and your competitors' ads have the same Quality score ad mentioned above, this is what makes the difference (and why Google makes so much money).  As only 11 ads will be shown on the first page, only the top bidding advertisers will be able to get to the top positions on Google paid search results.  This is why cost per click is so expensive (over $10 per click) for very competitive keywords where there are many contenders for the top position on Google results page.

 

To summarize it, we should only aim to get best performing (highest net margin) keywords to the top positions on Google Ads.  Keep those ad positions, and get the most traffic for your best keywords!