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.
- AdWords Position Preference is Dying. Good Riddance.  - April 7, 2011
- Is Google Exploiting Neuromarketing in Reporting Quality Scores?  - March 21, 2011
- Does Google Reward High Quality Scores with More Impressions?  - February 14, 2011
- Like a Rock: The ‘Bid-CPC’ Relationship  - January 19, 2011
- From Business Intelligence to Bathtub Insights  - December 30, 2010
- Google’s New “Automated Rules”  - December 9, 2010
- Braking the Rules  - December 6, 2010
- Google Rich Snippets for Shopping Sites: A New Dilemma  - November 4, 2010
- Quality Score Never Shined My Shoes  - October 19, 2010
- Ad Auctions are Not Auctions  - August 24, 2010