After a fair few years in search, I have repeatedly come across people obsessed with achieving PPC position, in particular, position one. As is the nature of an agency, I work, or have worked, with many different business models of ranging sizes and successes. This is one of the things that makes my role great, I really enjoy learning about new marketplaces and taking on the challenge of applying SGM’s search expertise to a new business model/marketplace.
One element of PPC that has repeatedly struck me as an area of controversy at times, is the age old question,”is position one best?”. In this blog, I have looked to share my views on this rather broad question by means of a number of different PPC account circumstances, as of course, this question would be impossible to answer without the proper context:
Low Conversion Rate PPC
From time to time, this is a situation we find ourselves in; a product, or site, that perhaps isn’t as competitive or as usable as others within the search marketplace. This, as I am sure you will agree, is perhaps one of the toughest challenges a PPC optimiser can face when tasked with driving positive ROI.
The fundamental challenge here is that a strong conversion rate powers up PPC campaigns, as a stronger conversion drives a lower cost per acquisition (CPA) which in turn means an optimiser can bid more aggressively and drive more traffic whilst keeping the CPA below the target, even if cost per clicks (CPCs) do increase. Conversely, a low conversion rate means that CPAs will already be higher and therefore bidding more aggressively becomes unachievable whilst maintaining a target CPA/ROI.
With a comparatively low conversion rate, bidding for position one on competitive terms becomes much less achievable, particularly when you take into account the fact that traffic quality can drop in position one compared to say positions four to six. We tend to find that users clicking on position one have a higher tendency to be browsing traffic earlier on in the customer buying cycle, which in turn leads to a lower conversion rate at this position. This combined with the higher CPC that will come from bidding more aggressively to appear in a higher position means that on an already low conversion rate, CPA is likely to be much too high to maintain position one despite the significant increases in traffic that will be delivered.
As such, in most cases (and please excuse my generalisation here to keep things relatively simple) we would look to focus on a long tail search strategy, bidding for lower positions typically on the right hand side or below the SEO listings, across a wide selection of keywords. Ensuring we are driving the lowest CPCs by optimising campaign/ad group structure and ad copy to gain maximum Quality Score (QS) advantages whilst also bidding for optimal conversion rate positions.
In this situation, by not focusing on position one and above-the-SEO-listing positions, we give the account the maximum chance of driving a positive ROI despite being significantly undermined by a lower than industry average conversion rate.
Low Margin PPC
As with low conversion rate PPC, trying to drive PPC ROI with a below market average product margin does present similar challenges. CPA becomes critical and the tipping point between positive and negative ROI reduces, which at times can make pushing for position one on competitive terms very challenging. However, I am sure you can sympathise, for example, our advertiser in the previously mentioned low conversion rate PPC example, has a poor conversion rate so perhaps runs tactical discounts to try to compete, this in turn helps to increase conversion rate, but at the same time slashes the margin!
In these situations we find we have to very much focus on the long tail of search like in the strategy above, not inflating CPCs by aggressively bidding for positions that won’t make financial sense.
PPC With A Limited Budget
So, with ecommerce PPC, we are all pretty familiar with the concepts of ROI, CPAs and contribution. These metrics help us to define the actions we take, what should we bid and whether it is commercially viable to spend more, increase our daily budgets, and so on. However, we do also work with non ecommerce/lead generating businesses, and whilst we always strive to set a trackable goal to optimise toward, it is not always possible. Now this situation throws up its own challenges to overcome, however in keeping with the theme of this blog I would like to consider the point, how do we decide what position to bid for, particularly if we are on a limited budget?
Not too frequently, but occasionally, we, as an agency, are given the directive to bid for position one and get maximum exposure. Now this statement can actually be contradictory if budgets are not infinite!
For example, we have worked with a business that wanted to bid for position one on a selection of very competitive keywords but had a limited budget of around £500 per day. So we created a well structured account that was very accurately split out to ensure we could absolutely maximise QS, as we were aware that position one CPCs were going to be high! The account went live and performed well, however by bidding for position one we found that we were using our daily budget very quickly and as such were losing significant amounts of impression share.
Position one was giving us great exposure, for the limited period of time we could appear for each day, but once the daily budget was done we could’t drive any more exposure and had to wait for the next day. So we proposed that to gain maximum exposure for this business, on a limited budget, we should not focus on the top positions, but rather focus on how low we could bid whilst still maintaining daily clicks and spending the full daily budget.
So be warned against bidding too aggressively when your budget is limited. There is no point in paying a £1 CPC for 10 clicks, when you could be paying £0.50 for 20 clicks from your £10 daily budget.
PPC With Optimal Drivers
Of course, I can’t finish this blog without mentioning one last situation, which is the one we all hope for as search marketers and optimisers! That is a PPC account and product that is very competitive, a great user experience throughout the site, and good margins.
In this situation, we can bid more aggressively and there is every chance that position one could work for multiple keywords, and in this situation, if conversion rate is strong enough, the huge increases in traffic from position one could very well overcome the drop in conversion rate we tend to see.
In summary, there will always be times when aiming for top positions will be part of the strategy, however, depending on a number of factors, like budget and conversion rates, first is not always best!