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Google: Conversion Rates Hardly Vary by Ad Position

Google Cheif Economist Explains Research

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Ever wondered if your AdWords conversion rates would be better if your ads were just positioned differently? According to Google, it doesn’t matter a whole lot where they are positioned.

Google Chief Economist Hal Varian and his team claim to have done some research into the subject and has concluded that conversion rates just don’t vary much by position.

Hal Varian"Since Google ranks ads by bid times ad quality, ads in higher positions tend to have higher quality and higher quality ads tend to have higher conversion rates," says Varian. "Thus you may see a correlation between auction position and conversion rates just due to this ad quality effect. However, the real question is how the conversion rate for the same ad would change if it were displayed in a different position."

Varian has an answer for that question too. "Another difficulty is that the average position number reported by Google is that it is an average over all auctions in which you participate," he adds. "If you increase your bid, it is quite possible to see your average position move lower on the page! The reason is that when you increase your bid, your ad will appear in new auctions, and it will tend to come in at the bottom of those new auctions. This effect can be large enough to push your overall average position down."

"We have used a statistical model to account for these effects and found that, on average, there is very little variation in conversion rates by position for the same ad," continues Varian. "For example, for pages where 11 ads are shown the conversion rate varies by less than 5% across positions. In other words, an ad that had a 1.0% conversion rate in the best position, would have about a 0.95% conversion rate in the worst position, on average. Ads above the search results have a conversion rate within ±2% of right-hand side positions."

There you have the gist of Google’s research into the matter (via Dan Friedman of Google’s Inside AdWords Crew). More info on the possibility of higher bids leading to lower ad positions can be found here.

I wonder if Google moving the ads on search results pages closer to the organic results has done or will do anything for conversion rates. We have not seen this discussed by Google.

Google: Conversion Rates Hardly Vary by Ad Position
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  • http://twitter.com/supersecretsoft Detlev Eller

    .. First, we would be better of, clarifying the question of what conversion we actually measure … converting ads to clicks? … clicks to leads … impressions to sales? …

    Then, depending on the market, ad position matters a lot.

    I have just completed 4 weeks of testing for a client, where we tested the effect of ad position aka lower budget, more impressions.

    the result is, that in this particular market, the CTR and lead count (phone calls) is very much higher on the positions 1-4. The test was run back and forth to validate the findings. each test segment run for a week, same ads, same budget, same keywords. just different positions ….

    Best,
    Detlev Eller
    http://twitter.com/supersecretsoft

  • http://www.clickequations.com Craig Danuloff

    Detlev: If you read the original adwords blog post (unfortunately not linked in the story above, http://bit.ly/gWbpM) you’ll see that there is another factor which is VERY hard to account for in your own tests – when you increase the bid to get higher position, the keyword is entered into more auctions. (Unless it’s just exact match). This is a subtle point but has huge implications. Many have reported position impacting conversion, but I don’t think Google’s results or decision to release them should be taken lightly.