AdWords Position Preference is Dying. Good Riddance.

Posted on Thursday, April 7th, 2011 by Print This Post Print This Post

Categories - Featured, SEM

Two very interesting blog posts from Google’s official ‘Inside AdWords’ blog these past couple of days. On Monday, Google reported that they are retiring the ‘position preference’ feature in AdWords. It can no longer be enabled for new campaigns and will be deactivated entirely in early May.

Why is Google taking away this option? Pamela Parker hit the nail on the head when she wrote in Search Engine Land: “The company is seeking to dissuade advertisers from putting an emphasis on the position of their ads.”

Average position has always been a headache. I described some of the reasons why in my blog post ‘Average Position is a Really Perverse Metric‘ here at The Search Agents’ blog. For one, your average position can be equal to any number (for example “4″) even  if your ad never appeared in that particular position. Secondly, it can decrease when the bid increases. (Strange, but true.)

To help clear up the confusion, Google’s ‘Inside AdWords’ offered a follow-up blog post on Tuesday, where they described some of what I said above, but also offered some very interesting new details as well.

First, the reported ‘Average Position’ value is not based on your ad’s position in search engine results pages (SERPs). Yes, re-read that if you need to.

Google uses an auction-like system to determine where ads appear on the SERP, with each ad being ranked by multiplying its bid by its Quality Score. (In fact, bid times Quality Score is called ‘AdRank’.) However, as ClickEquations’ Craig Danuloff noted, in some cases ads with a lower AdRank can jump over ones with higher AdRank, for example, to get to the top stile above the organic listings.

Thus, the position in which an ad appears in the SERP might not be the same as its position in Google’s internal ‘bid x QS’ calculations that generated that SERP. But the ‘average position’ metric which Google actually reports to you is based on those initial internal calculations, not on the resulting SERP.

Second, the blog post re-iterated a previous point they made where Google’s chief economist, Dr. Hal Varian, reported that conversion rates don’t change (much) with position. If your conversion rate (or value of a conversion) does not change with position, then when you bid per-click, your bid should not change with position either.

There are other interesting points in these blog posts, so I’d recommend reading them in full.

So, why is Google taking away position preference after all? Because you shouldn’t be worrying about your position in the first place.

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6 Responses to “AdWords Position Preference is Dying. Good Riddance.”

  1. David says:

    Very interesting, i wonder what Hal Varian’s “don’t change “much” really means when considering specific positions. That being said, position to me as it relates to a particular advertiser if really about traffic volumes and economic efficiency. If all advertising competitors have similiar economics (very big if), then the most efficient and sophisticated will rise to the top position and get the most traffic. The problem is that advertisers have vastly different strategies, business models and economics making it very hard to really know.

    • Bradd Libby says:

      David,

      Google’s post from 2009 stating that conversion rates don’t vary much with position states that on “pages where 11 ads are shown the conversion rate varies by less than 5% across positions” and that “ads above the search results have a conversion rate within ±2% of right-hand side positions”.

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