AdWords: Is 3rd Position Better Than 1st?

Hey everybody, this is Adam with ParaCore and in today’s video I’m gonna talk to you about why you may wanna consider third position on your Google AdWords placement instead of first position. Now, as an account manager, marketer, business owner running an AdWords campaign, you are often faced with the decision of what you want your bids to be, in what position you wanna be on the search results page.

And so here’s an example of a search results page. So Google, search box, and three ad positions, ad position one, ad position two, and ad position three. And in many cases the default mindset is I wanna be in first position. I wanna be at the top of search results so people click me first every single time. Now let’s do a little bit of math to illustrate why that may or may not be the case. Hypothetically, let’s say that you have a $10 cost per click. You’re getting 10 clicks and that equals $100 ad spend. Let’s say you convert 10% of those and so your cost per acquisition, your lead cost, is $100. Alright, so that’s what your math might look like when you’re in the first position of in this scenario.

Now third position costs less than first position, which I think we all already know. I’m gonna use a $5 cost per click, just for simple math and to illustrate a point. So at $5 cost per click, you’re actually gonna get 20 clicks and that’s gonna equal $100 in ad spend. You’re still gonna convert at 10% and your cost per acquisition is then gonna be $50 because you received two leads. So this equals two leads and this equals one lead. So when you look at the second scenario you were in third position, you were lower on the page, your cost per click was lower and what happens is you get twice as much traffic if the cost per click is twice as much, which it probably isn’t but to illustrate the point. You get twice as much traffic, you convert at the same rate, and then you’re gonna get twice as many leads. So from a performance based perspective, that’s a pretty good situation.

When you strip away the I wanna be at the top, you strip away the vanity, and you strip away the emotion of not being in first position. Then your results are gonna perform quite a bit better. And there’s really two ways that you can test and experiment and get to these results. So the first one is using a manual cost per click strategy. And in that case you might be saying I’m bidding $10 and these are the results that I’m getting, and I’m gonna decrease that to $8 and see what happens with my clicks and impressions and conversions. And then also look at your average position as you’re making the change. You might let that run for 10 days and then you might go down to $7 and $6. And what you’re doing is you’re decreasing the bid enough as to where your ads are still showing, your average position is slowly gonna increase. So you’re gonna see, well I guess if you’re looking at, I don’t know which way, I think it’s reverse. You’re gonna see a slow increase in average position, which is fine, but what you don’t wanna see is, you don’t wanna see your budget not being hit.

Once your budget stops being hit or you stop the impressions start to dip or you’re not getting clicks, then you’ve actually gone too far and you’ve decreased the bid just too much and so you wanna start bumping it up. What I like to do is a tier down step decrease so that I can just incrementally go from my current bid down to a lower bid and then slowly get to a threshold that drops me off third position and then I can just start increasing my bid again. That’s the manual approach and that’s kind of a painful approach. It takes a long time. What we like to do at ParaCore, is we like to do the maximize clicks approach. And maximize clicks works really really really well if you are hitting budget in your campaign or you’re basically hitting budget in your campaign. So what you can do is you can take your budget and change the campaign to maximize clicks and just decrease the budget, which might work, or quite honestly, just changing to maximize clicks might auto-adjust your bids down to a position where you’re getting as many clicks as possible. And you know what, it doesn’t matter if you’re in first position, second position, third position, fourth, fifth, sixth, seventh, or eighth. I don’t care if I’m all the way at the bottom of the page and my cost per click is 45 cents. If my budget is being spent and I’m getting all the clicks, my conversion rate is staying consistent, I don’t care if I’m on page 10, it literally does not matter to me. Do maximize clicks and see what AdWords automatically adjusts your bid to. And then you’re gonna get as many clicks for that budget as possible. So in many cases we use this strategy as we’re trying to optimize a campaign in order to get more clicks for the same budget, and just improve the performance with the same budget being set.

So my name is Adam, I’m the owner of ParaCore, we’re a pay per click lead generation agency. We’re in Phoenix, if you have any questions, please let me know, like the video. Subscribe, comment below, and I appreciate you watching. And I’ll see ya in the next video.