As a creative editor, I consider myself to be more of a wordsmith than a number cruncher. When it comes to keyword bidding, I almost always leave that task to those who know best: account managers, analysts, computers… you get the idea. Let’s just say, the left side of my brain is slightly atrophied. But since joining TSA, that part of me has been through quite a workout. Most recently, I read a blog regarding the relationship between ad position and conversion rates. In it Google reports, based on its own research study, that there is very little, if no, connection between ad position and conversion rate. Interesting. But even more interesting to me was one particular side note from the author:
“…the average [ad] position number reported by Google [is an] average over all auctions in which you participate. If you increase your bid, it is quite possible to see your average position move lower on the page! … This effect can be large enough to push your overall average position down.”News to me—perhaps not to the SEM world as a whole—but still, news to me. I decided to dig deeper. But in order to wrap my head around this concept and truly understand how to heed its intended advice, I had to get down to the basics—and I mean basic basics. You see, when I read a statement like the one above, my right brain immediately goes into daydream mode. It doesn’t even bother trying to decipher anything remotely mathematical. Once it sees words like “average,” “bid,” or “number,” it begins to retreat. My left brain, on the other hand, goes into overdrive (remember, it’s a bit out of shape). Dreadfully weak and terribly oxygen-deprived, it can only begin to understand if the original statement is dissected into several, smaller parts. And so, without going into too much detail, I wound up revisiting one of the most basic concepts behind SEM, the “auction.” Before today, I thought I had this concept down. Not so. When boiled down to its most basic definition, I could finally understand why bidding higher on a keyword can actually lower one’s ad position on the page. Yes, not just as an average across an entire account, but on the actual Google page itself. I like Google Chief Economist, Hal Varian’s take from “Introduction to the Google Ad Auction” in which he says, “Every time a query is made on Google, we run an auction.” So, every time, literally every time someone types a query in Google, a new auction is taking place. So based on a query’s popularity, an auction on that query could theoretically occur dozens to millions of times a day. Considering that the bidding landscape is always changing, meaning you and/or your competitors are modifying bids on the same query at any given moment, your ad position is always fluctuating. What we see in the Google UI is the average ad position across dozens to millions of individual auctions. Relating this back to the original statement in question, it is quite possible to lower an ad’s position by raising its bid – either on the search query page or on average. The reason being:
- A higher bid will most likely lead to more impressions.
- More impressions means more auctions.
- More auctions means more competitors.
- More competitors means new competitors.
- New competitors means new (and possibly higher) bids to compete against.