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PPC Optimization & Balancing the Relationship Between Metrics: Top 3 Things to Consider

tabeling-jason
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Last month I posted an article that looked at the relationship between click-through rates and average position. The data showed the high correlation between a top positions and having a high click-through rate.

The post sparked several comments and discussion on Twitter, and a lot of debate around the business challenges that come with the findings. Should you really be chasing a higher position in order to get the incremental clicks? What about the relationship that average position has with other metrics, primarily conversions?

This post follows up on that article with some thoughts on these comments and questions. Here are the top three things to consider as you optimize and balance the relationship between metrics.

1. Conversion Rate and Position do Have a Correlation

Conversion Rate by Position Data

Conversion Rate by Position

I ran the above data from our clients and found conversion rates do go down as position decreases. This may seem obvious, as you would expect bids to be higher where conversion rate is higher, and therefore a higher position can be afforded.

This could be due to a multitude of factors, and shouldn't be taken as gospel. However, don't ignore the relationship between any two metrics as you optimize your program.

2. Every Action has an Equal and Opposite Reaction

No matter what you do – raise bids or lower bids, add keywords or add negatives – you're always balancing the forces of efficiency and volume. It’s rare that you make an optimization decision that doesn’t involve this paradigm.

As you make decisions, don’t fool yourself into thinking you can advance the ball on both fronts. This is a struggle for all clients and brands because, like any good businessperson, you strive to achieve both.

3. Remember to Focus on the Business Problem You're Trying to Solve

It's so easy to think about average position, keywords, match types, bids, etc., that too often brands forget about what the ultimate purpose of running a paid search program is for them.

If you're looking to drive sales at the lowest possible cost per conversion, don’t get distracted by your impression share or average position. After all, average position masks your actual position that is determined individually during each specific auction.

These metrics are all directional and indicators to a larger business objective. Let that business objective drive your decisions.

Summary

All the data at your fingertips can be a distraction at times. I think the most important thing for paid media practitioners is to use the powers of data for good and tie their data back to business impact vs. optimizing for the sake of optimizing. A high CPC or low position means nothing if the conversions are profitable.


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