New York—A new research paper disputes the prevailing view that the top positions in search query results are always the most profitable ones for advertisers.
The study—“An Empirical Analysis of Search Engine Advertising: Sponsored Search in Electronic Markets” by New York University professors Anindya Ghose and Sha Yang—found that the most prominent positions on the search engine results page are not always the most profitable ones, despite having higher click-through rates, due to aggressive bidding that increases the cost of advertising.
Also, the study found that retailer-specific keywords are associated with an increase in click-through and conversion rates, while brand-specific keywords are associated with a decrease.
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Richard Stokes
Founder, AdGooroo
June 3, 2009 04:55 pm
We agree. As I noted in my book, "Mastering Search Advertising,” the general rule is that if you aren’t making money at the bottom of the page, you will not make money by bidding higher. For broad keywords, set your bids to position 7 and monitor revenue and profits for each keyword to ensure it’s profitable. If it is, you want to then investigate whether you can make more money at a higher position. Under most situations, you’ll want to be no higher than 5th. One exception occurs when your average visitor value exceeds 10 times the bid price at position 8 (av. visitor value is simply your average order size multiplied by your conversion rate). For more on this, read our research paper, “How keyword length and ad position impact CTR and CPC on Google AdWords” (free download from our research library)
http://www.adgooroo.com/adgooroo_research_library.php
Good luck.
Richard Stokes
President
AdGooroo, LLC
