Kyle Sulerud - October 24, 2019A lot of people ask this question. But let me tell you– this is more likely a wrong or pointless question to ask.
Being in the top ad position should not be the goal.
If you get the top ad position, and that’s where you become the most profitable, then that’s great! We will talk about how to get there.
But, let me emphasize that being in the top ad position is very often not the most profitable place to be. The top ad position does not always equal the most amount of profit.
Let me break this down for you.
Assuming that every ad is equal, you need to bid higher than anybody else to be in the top position. If you’re willing to pay the most for clicks from that position, then Google is going to put you there. Yes, simply by being in the top position, it’s inevitable that you are going to have a high click through rate.
However, ads are not always equal.
Google doesn’t just reward companies who pay the most. Remember, they’re not just offering ads, they’re an actual search engine. Thus, they also reward you for having ads and landing pages that are relevant to the things people were searching for.
If people searching for one thing, and you show them an ad for something else, that ad won’t be relevant. In that case, even if you’re willing to pay more per click (outbidding another company), Google will not choose to reward you the top spot. Google doesn’t want to put irrelevant ads on the page, especially in the top position.
There’s a wide range of relevancy (highly relevant to irrelevant). If it’s irrelevant, it won’t matter how much you bid, Google is not going to show the ad at all.
The more relevant your ad is to the thing that people were searching for, the less you actually have to pay to be higher on the page.
With all else equal, it really comes down to who is willing to pay the most. If there are three or four companies with highly relevant ads for a particular search term, then it’s a bidding war. Whoever is willing to pay the most is going to get the top ad position.
Again, be reminded that being in the top ad position is very often not the most profitable place to be.
Whether or not you want to be in the top position, should really come down to profitability.
As a hypothetical example:
You can be in position 3 or 4, and you’re paying about $2.00 per click.
In that same search, you could possibly be in the top position, but you need to pay $6.00 per click.
So in this example, the difference between position 3 and position 1 is spending 3 times as much.
If you have really high profit margins and are able to take those clicks and convert them into customers, then being in the top position may be the best place to be because you will get more traffic. Let’s say your average profit per click is $50.00 , it won’t matter to you if you’re going to pay $2.00 per click or $6.00 per click, so paying more is the better option because you would get the most traffic just by being in the top ad position.
If your profit margins are slimmer, in that case you can’t really afford to pay $6.00 just for the click. You would need to bid lower and perhaps the $2.00 cost per click in a lower ad position is the place to be. While you won’t get as much traffic, at least you’ll be profitable.
So that’s the trade off. If you want to be in the top position, you will have to pay more. The bottom line is you really need to look at profitability. Sometimes you can just learn this through trial and error. You are not going to know how profitable your clicks are until you start buying some clicks. Even if you’ve gotten traffic from other sources in the past, if you’re brand new in Google Ads, that traffic is going to behave differently than other traffic.
You can take an educated guess on what your profit per click is going to be and how much you’re willing to pay per click, but you’re going to have to watch and see how it actually plays out. If your estimate was off, then you need to adjust.
What’s the Bottom line?
It is important to ask yourself why you want to be in the top position. Make sure that the top position is going to be the most profitable place. And really, that top position should never be the goal. If profitability means being in the top ad position, that’s great. But if the most profitable place for you is not the top position, that’s fine as well. No need to stress about it. The goal is not the top spot on the page, the goal is being on top of your goals for profitability.