There are many possible bidding strategies for AdWords, but at the end of the day what it comes up to is simply where will your Advert shows and and at what price.
Will it shows first? Will it show last? Will the click be expensive?
There are a few correlations that are almost always true:
- Higher positions will cost more per click
- Higher positions will deliver more clicks
- Higher positions will have a lower conversion rate
The logic is pretty straightforward, higher positions get more visibility and so get more clicks. Advertisers compete via the auction system for the first ranks, so this makes those more expensive.
The conversion instead is more about user psychology, the more they dig down in the results the more they are interested. A click on position 1 shows much less commitment than a click in position 10.
So now the important question: Which position should you bid for?
There is no magic answer that always works, since it also may vary from market to market, but in general terms we can say that the more you appeal to the generic audience for that keyword the higher you should bid (if your conversion rate allows it) and the more you are targeting a specific segment of that audience, the lower you should bid.
Of course the factors of conversion will enter into play too, meaning that if your site is poorly designed and your prices are expensive you’ll have a lower conversion rate that won’t necessarily let you bid for #1.
Generic audience simply means what people that search that keyword are searching for “in general”. It may requires some research and experimentation in order to find it out.
For example let’s think about jewelry related keywords. What are people that search that specific keyword looking for in terms of price? Are most people looking to spend $100 or $10,000? The point here is that for a keyword like that the price range is so huge that you may completely fail if you don’t know the statistics. Maybe 95% of the people are looking to spend between $100 and $500 and if you don’t give good visibility to that price range on your site you won’t convert.
Now for example let’s say you sell very expensive rings that interests only 1% of the traffic, then it makes sense to buy a very low position and clearly state in your advert the segment you are targeting, as you already know that people searching that keyword that are looking for what you sell will very likely:
- Have a hard time finding what they are looking for on the generalists #1 sites
- Already know they’ll have a hard time so already be prepared to go through many sites in order to find it
As a general conclusion, if you are a generalist you should really aim for #1, if you can’t get #1 profitably then you should work on your conversion. If you are a specialist you should instead work very hard on clearly stating your specialty in your Advert.
A related post to this article can be found here: http://www.ppchacking.com/2009/01/focusing-on-ctr-for-your-adverts-and-forgetting-conversions/
Giotto De Filippi adverts writing, adwords, conversion rate, ctr