To Bid for #1 Ad Position or to Not Bid for #1 Ad Position?

July 21, 2009 by Pablo Palatnik

Brian Carter had an interesting post in Search Engine Journal titled, “Quality Score Surprise! #1 Ad Position Doesn’t Improve QS.”

So, if you don’t know or havent been around the PPC game too long, how Google works is the higher your CTR, the lower your click will be and higher position your ad will get, here is an image from the SEJ article:

Here is a quote from what the Adwords Rep told him, “CTR is normalized in regard to quality score so ads in top positions which usually have a high CTR don’t have an unfair advantage. While higher positions tend to have a higher CTR, we expect higher positions to have a higher CTR.

For example, we know that when an ad appears in position 4 it has an x% CTR. When that same ad moves up to position 1, with no other change, that same ad has a CTR of x+y% CTR. When we calculate quality score, we remove the impact of the y variable so that we just have the intrinsic CTR of the ad, independent of position. Therefore, while increasing bid may increase CTR, that increase alone should not improve the advertiser’s quality score”

Nevertheless, many people have told me that yes, a good CTR has decreased bids but personally, I don’t see that. I believe Google HAS TO BE smart enough (the algo and programmers) to understand the ad position and what a good CTR has to be for that good CTR. Let’s face it, the crappiest ad will get clicks if its at the top of the search results, thats just how it works, BUT, I have seen better CTRs in other positions than #1 therefore getting an increase in ad position.

I haven’t confirmed that for sure because we dont know what other advertisers are bidding. If they are bidding more than I am and I am higher, then it holds true. We’ve yet to really confirm this algo.