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October 21, 2008

The Cost of Bidding for the Top Position on Google Adwords

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One of my companies recently raised their Google Adwords bids and budget. They were effectively giving Google enough budget to place their Ads consistently at position number 1. We discussed this and left the bids high but used position preference to bid for position no 3. The client then modified this to position 2.
Increasing costs of bidding for position 1The table shows how the clicks and the costs ramped up from position 3 to 2 to 1. The average cost-per-click, CPC, ramped from 24p to 31p to 52p which does not look as bad as the total cost. The problem was that they were paying the increased CPC for all of the clicks. If we look again at the figures and cost the extra clicks then we can see that the incremental CPCs go from 24p to 68p to 97p.
Real incremental costs for increasing the position.It was notable that being at no.1 did bring in a lot more clicks. Further analysis showed that these extra clicks were for more general keywords that had not yet been optimised into their own Ad Group. The good news was that these extra clicks could be generated for a lot less than 97p each.

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