Kyle Sulerud - September 21, 2020Today, I’m gonna be answering a question from Richard. He asks:
“If you have a very limited budget, does it make sense to not bid in the top spot or two for a search ad? Many people will pass over your ad in a poorer position, but so what? Your budget will eventually get filled at a lower cost per click, does that make sense?”
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This question makes a lot of sense. Let me explain how I look at this. Let’s say you have a limited budget of $100 per day and, in order to get clicks from the top position of the keywords you are targeting, you are paying $10 per click. That gives you 10 clicks per day from the top position.
Let’s also say that you could get clicks from the third position, or maybe even from the bottom of the page for $5 per day. So now with that same budget, you are getting 20 clicks per day instead of 10. Obviously, that makes a lot more sense.
While there are benefits of being in the top position, the main one is that you are going to get more traffic. So, this is more for “if you have the budget”. If your campaign is profitable, you’ve proven the ROI, and you are able to afford a higher cost per click, you can then bid higher, pay more per click, get more business, and end up being more profitable.
If you have a limited budget you are sticking to and you haven’t really proven things out yet, it makes way more sense to get 20 clicks instead of 10 clicks. Of course, that’s a hypothetical example, but I’m using it because I think the math makes a lot of sense.
One thing about being in the lower position is that people have already looked through the other higher-positioned ads. The question mentioned that people may have passed it over, but actually they don’t get that far. It’s not that they’re passing over your ad, they’re just not making it to your ad. They’re finding a solution to their problem with one of the higher ads on the page.
If they’ve already gone through those other ads, maybe they’ve read the ads, clicked and gone through those websites, and haven’t found a solution yet. Now, they’re all the way down to your ad in the lower position, and if you’re able to solve their problem, that’s great! They’re probably really looking for a solution at this point because no one else has been able to help them yet.
So, not always, but sometimes, clicks from lower positions convert a little better because readers are tired of researching and are actually ready to take action at that point.
So, to answer your question, that does make sense. Don’t worry about being in the top position.
You’re gonna lose clicks no matter what.
There are two metrics that you can look at in the campaign (“IS” stands for “impression share”):
- Search lost IS (budget)
- Search lost IS (rank)
If you’re losing impressions (and, by extension, clicks) due to budget, it means that your ad is not getting shown as often as it could because your budget is running out every day. That’s what happens when you’re overpaying to be in the top position and only getting 10 clicks per day for $100.
You will also lose traffic due to rank. That basically means you’re not bidding high enough for your ad to be shown that much. That’ll happen if you’re bidding lower and your ads are being shown in the lower position, but then you’re getting 20 clicks for $100 instead of 10.
So, I would prefer to lose traffic due to rank. I see it as more of a problem if an account losing traffic due to budget. That tells me we need to either increase the budget or, if the budget truly is limited, we should decrease the bids because that will allow us to get more traffic.