For Google AdWords, It Pays to be on Top

The new “Top vs. Side” segmentation report announced by Google has led my firm to valuable new AdWords’ insights. We confirmed just how important it is to ensure your ads are shown at the top of the page — versus the side of the page — and learned much more in the process.

“Top” ads appear above organic results. “Side” ads appear to the right of the results.

Higher Click-thru Rates for Top Ads

Conventional wisdom, largely influenced by data AOL leaked in 2006 — see the TechCrunch article about it — is that the top-ranked natural listing in search engines is clicked more than 40 times for every 100 times it is displayed. That translates into a 40 percent click-thru rate.

By contrast, after running “Top vs. Side” reports on dozens of large pay-per-click campaigns, we’ve found that paid ads at the top of search results can consistently garner click-thru rates ranging from 10 percent to 35 percent. While it’s true that high-ranking natural results are likely to receive a greater share of clicks, PPC ads appearing at the top also receive a large percent. This cannot be ignored.

Data in the table below portrays the dramatic difference when an ad shows at the top of the search results page, versus the side.

That is not a typo. The “Top” ad garnered a 35.67 percent click-thru rate when it appeared on top, versus a 1.45 percent click-thru rate on the side. This is just one relatively extreme example, although we’ve observed that ads consistently receive 10 times the clicks — or more — when they’re on top, and that the click thru rate is frequently above 10 percent.

View this data within the "Segment" menu.

Generating this data is as easy as clicking on the “Segment” menu within your AdWords Campaigns tab, and selecting “Top vs. Side.”

Conversion Rates Don’t Suffer

Sure, the click-thru rate for top-of-page ads is much higher than ads on the side, but how do those clicks translate into sales? Since the early days of PPC ads, advertisers have assumed that the drawback of having a very high position in search results was that those ads would generate a disproportionate share of clicks from unqualified buyers. The data in the table above, as well as data from hundreds of campaigns we reviewed, shows otherwise.

In this case, not only did the ad receive a much higher click-thru rate, it also converted a higher share of clickers into buyers. We noticed similar results for the other campaigns and ads we reviewed, but this was far from a scientific study.

Reducing Reliance on Natural Search

As more merchants review Top vs. Side reports for their AdWords campaigns, we’re convinced they’ll see similar data. For PPC to be a significant driver of revenue, merchants should maximize clicks by optimizing ads so that they can profitably appear at the top of Google’s search results.

Here are three tips to push your Google AdWords ads to the top of the page, and to maximize your click thru rate.

1. Optimize your Quality Score and click-thru rate. Years ago, you could ensure a top spot by outbidding your competitors. But now Google considers the “Quality Score” — a rough ranking of an ad’s performance, explained further in Google’s AdWords help. Our research has shown that Quality Score increases the fastest when you create tightly themed ad groups using keywords that are very relevant to the content on your landing page.

   This, along with testing and optimizing your copy, will substantially increase your click-thru rate. As your click-thru rate increases, so too should your Quality Score. And as your Quality Score increases, your ads should appear higher on the search results’ page, especially as you increase your bids.

   The value of improving your Quality Score is huge. If “Advertiser A,” hypothetically, has a keyword with a quality score of 10/10, he or she might pay just $0.50 per click to be in a top position. “Advertise B,” conversely, with a Quality Score of 4/10, might pay a hefty $1.50 per click for a top position on the same keyword.

2. Blend your headline with “Description Line 1.” Google is now testing a new format where it combines your 25 character “headline” with your 35 character “Line 1” description when your ad shows at the top of the page. The result is a 60-character headline — 63 characters if you include the extra dashes Google includes — on one line that can make your PPC ad resemble a natural listing.

   Here’s what it looks like.

   

   An example "Blended" headline.

   When your ad appears on top, its primary competition for attracting clicks is the first the organic listings, and the two additional top PPC listings. Ensure your ad incorporates what they do well, while finding unique ways to stand out.

3. Test site links that appear in PPC ads. Google gives you the power at the campaign level to create and customize site links that will show beneath your ad when it appears at the top. Site links give you more real estate, but they don’t necessarily increase your click-thru rates or conversion rates. Test and optimize your site links over time to determine whether they improve your click-thru and conversion performance, and then optimize your site link strategy accordingly.

   

   You can edit the links beneath your ad.

   On the above example, see how site links are displayed for an Office Depot search. On a branded campaign like this one, site links that offer site-wide deals or that emphasize timely best sellers may work well. But on non-branded campaigns, site links that are more relevant to a shopper’s search terms may perform even better.

Conclusion

Google continues to optimize its results pages to increase the rate at which searchers click on paid ads. These efforts appear to be working, as Google’s second-quarter 2011 financial report stated that paid clicks increased 18 percent over the same quarter in 2010. Ecommerce merchants have an opportunity to tap into this growing and highly controllable source of traffic.

The new “Top vs. Side” reporting tools confirm that ads on the top of search result pages perform dramatically better than ads on the side. To get to the top, focus on improving your ad copy and Quality Scores. And continually test to improve your site’s conversion rate.