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Understanding AdWords Average Position: Optimize Your PPC Performance

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Recently I read, and re-read, "Understanding the Average Position Metric," by Hal Varian, Google's Chief Economist, on the Inside AdWords blog. This is a topic many advertisers don't fully understand, so we'll look at a couple of data points from Varian's post and then go deeper into the AdWords average position.

Position 1 (top) vs. Position 1 (side)

The top PPC position above organic is obviously Position 1. However, when no ads are shown above organic, the right rail top position is also Position 1.

Here are examples of each where the ad rank would report out as position 1 for [apple” and [chipotle”:

Google Apple PPC Ad

In the [apple” example, Position 1 is clearly above the organic results.

Google Chipotle PPC Ad

However, in the [chipotle” example, you have to go below the map to see their ad, and this is also considered Position 1.

Impact on Your PPC Campaigns

The biggest impact from my view is how this masks the impact to your performance. You could be running a report, and trying to identify bid changes, only to think there is no room to improve, because your average position is 1.

Obviously, this isn't the case. So what can you do about it?

Two tools can help you better understand performance by position.

AdWords Bid Simulator

The first is the bid simulator tool within AdWords. While it's disappointing this data can't be bulk exported, the data is valuable.

Bid Simulator

An increased bid doesn't necessarily increase the total amount of available impressions, but it does scale the amount received in the top position. In this example:

  • Dropping CPCs from $1 to $0.28 only reduces actual CPC by $0.01, but reduces traffic by 700 clicks.

  • At the current position/bid, 86 percent of impression are "top" vs. $0.09 Max CPC would be 48 percent.

Auto-Tagging

The other option is to link your Google Analytics and AdWords accounts with auto-tagging. This isn't ideal either, but gives you some interesting data around average position performance.

Google Analytics Top vs. Side

Here, the bounce rate is ˜7 points lower in the side positions. For this client the decrease in click traffic may still yield a better conversion rate given the improved bounce rate. The saved ad spend can then be reinvested into other keywords, or advertising to drive incremental results.

Bottom Line

Understanding how average position works and impacts your campaigns is a key piece to your bottom line performance. Look for ways to test and optimize this data in context of your total search campaign, and you should see your total results improve.

Let's not even talk about if you were able to coordinate this with your organic listings as they change in position! Integrated search programs are a whole other area where search marketers need to improve, but we'll save for another time.


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