Understanding importance of page position on your Google advertising is a must to get effective ROI! Many advertisers have a conception that being the first is the best position, but research is showing that it isn’t always the case.
Many business and advertisers are getting distracted on bringing your paid ad to position number 1. I would suggest working towards spending your budget in the way that actually gets you the best ROI. Yes, this could mean spending just enough on AdWords to leverage towards position 2, 3 or even 4, as recent studies have highlighted that these can, in fact, be more effective than position 1.
A recent study by Adobe Media Optimizer in February 2016 went further and concluded that the 4th position on the page produces the best results. While most advertisers spend more money bidding to be the number 1 or number 2, the lower positions like 3 and 4 are, in many cases producing better conversions.
In a RealClicks experiment that we ran on a client’s AdWords leveraging we found that the first position had a conversion rate of 1.6%, the second a conversion ratio of 2.3% and the third position had a conversion ratio of 5.3%. The most logical explanation we could devise was that prospects are likely to click on three options while researching a purchase or service. The most likely run of clicks, all things being equal, would be 1, 2 and then 3 positions. After visiting a couple of sites, the prospect is getting a better understanding of the market and probably getting close to a decision. Whatever is going on here in the prospects search patterns, it’s clear that our case study did not uphold the #1 strategy.
The conversion rate is not always fixed, and clearly, advertisers could improve these rates with better creative and more exciting offers. Truth be told the above experiment probably did not have enough subjects and probably did not control all the variables well enough to be considered solid data. But let’s do some math, cause math never lies.
We then entertained another consideration – were visitors in our experiment bypassing the paid ads to also look at the organic listing? This could suggest that the paid ads physically closest to the organic listing on the search results page is being perceived to be more legitimate and are winning customers trust, resulting in higher conversions. A portion of the customers could well be scrolling back up from the organic section that they visited first.
Let’s consider some plausible scenarios that could come up for an AdWords campaign:
3rd Position Example
10k spend, clicks cost $1.70, which gets 5,882 prospects to the site. The site is sexy and gets a conversion of 7.6% to call or email; this means that 10K will get 447 Leads per month.
1st Position Example
10K spend, clicks cost $2.10 (higher bids for first spot, everything else created equal ), gets 4,761 prospects to the site. The conversion rate is constant at 7.6%; so for 10K we get 361 Leads per month.
By all means, run your own experiments, we have. In some cases, if the search volume is very low there is no choice but to go for the top spot. The first position usually comes with higher click-through rates (CTR), and in low search volume verticals, you might need this traffic. But for volume rich industries, the math does not lie. Paying more on average for clicks simply reduces the traffic for a given spend and then reduces the subsequent leads.
Ultimately, position number 1 does have its advantages from a visibility standpoint, but it might not be the most effective regarding conversions. Merely bidding more on AdWords for your business to be on number 1 will not necessarily be the answer to giving you a better ROI. Remember maintaining and growing the profitability of your business should be the focus.