Bidding for the highest positions on search results pages may not be the best use of marketing dollars for most online retailers, according to new research from AdGooroo, an online market research firm.
AdGooroo’s proprietary search index—an analysis of the correlation between cost-per-click, click-through rates and average position on Google AdWords for 333 search phrases—found that bidding for the highest positions on search results pages is profitable only for high-budget advertisers seeking to maximize brand awareness.
“The top position in AdWords only makes sense for the top-tier advertisers working with large budgets and those with highly sophisticated ROI models that track the return on multiple keywords leading up to a single lead or sale,” says Richard Stokes, AdGooroo president.
Companies with a direct marketing focus typically will maximize their profits by bidding for the second-to-last position on broad keywords and positions five to seven for niche keywords, according to AdGooroo. This bidding strategy minimizes costs while exploiting underpriced traffic opportunities at the bottom of search results pages.
“Position seven, on average, delivers the most profitability for AdWords advertisers, and if a keyword doesn’t deliver a profit at the seventh position, it’s highly unlikely that term can be profitable at any rank,” Stokes says.
The AdGooroo report “Research Update: How Keyword Length and Ad Position Impact Clickthrough Rate and Cost-per-click on Google AdWords” is available for free download at the AdGooroo site.
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