In a recent post on Google’s Inside Adwords blog, Google revealed that the position of an ad on the page does not affect the ad’s conversion rate (see definitions below).
It remains true that people are more likely to click on search results that are higher on the page than results that are lower on the page. However, they are just as likely to buy whether the ad was higher or lower on the page. Google was able to determine this by looking at examples of the same ad in different positions, and looking at the corresponding conversion rates.
This makes intuitive sense. Once the click brings a prospect to your website, whether she buys your product or registers for your service has nothing to do with where the ad was on the search page. Whether she buys has everything to do with the relevance of your web page compared to what she was looking for. So, as long as you are on the first page and can be seen, the conversion is driven by the relevance and quality of your website.
Implications for Using Adwords
This suggests that there may not be any benefit in trying to get your ad higher up on the page, assuming it’s already on the first page. With Adwords, you are paying by the click. So if you buy 100 clicks, it may not matter to you whether the ad was placed high on the search results or lower on the page. You’ll get your 100 clicks either way. Whether they convert (i.e. buy or sign up) depends on the relevance and quality of your site.
Definition of CLICK-THROUGH RATE (CTR)
The “click-through-rate” is the number of users who clicked on an ad (on a web page) divided by the number of times the ad was delivered (a.k.a. impressions).
click_through_rate = clicks / impressions
For example, if a banner ad is delivered 100 times and 3 people click on the ad, then the click through rate is .03 or 3%.
Definition of CONVERSION-RATE
The “conversion rate” is the number of people who buy the product (or register for your service) divided by the number of people who see your ad.
conversion_rate = buys / views
It can be the ratio of buyers to viewers, or joiners to viewers, if the site is asking for membership. For example, if 100 people view your ad and 2 buy your product, then your conversion rate is .02, or 2%.