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Why holding the No.1 advertising position on Google may be hurting your marketing ROI

Running search ad campaigns on Google? You have to hold the No.1 position for optimum success, right? Actually, no.

Search network advertising on Google Ads (formerly AdWords) offers an incredible opportunity to put your business in front of those actively seeking the products or services your offer, regardless of where you rank organically, but there is plenty of potential to leak money if the setup is not executed correctly or you adopt a set-and-forget mentality rather than continually seeking to optimise your campaign.

It’s common for business owners or marketing managers to strive for the No.1 ad position at all costs, but depending on your industry and level of competition for certain search terms, achieving this goal can be expensive and will not necessarily deliver the greatest return on investment (ROI).

Whereas being No.1 in the organic search results is a worthwhile goal to help increase traffic to your website, because clicks on those listings don’t cost you anything, there are two simple facts to keep in mind when it comes to paid search:

  1. The higher up the page your ad shows, the higher your cost per click will be.
  2. Not every click will result in a conversion (e.g. a sale or a lead).

At Kook, with our clients’ Google Ads search campaigns, rather than always showing your ads at the top of the page we seek a balance between your ads’ average position and your cost per conversion. In other words, our strategy is to continuously increase sales or leads while minimising the costs to achieve them.

A graph showing a Kook client's lowered cost per conversion (red line) as their average ad position on their Google Ads search campaign increased, pushing their ads further down from the No.1 spot.

Take the example of a local tradesperson whose search campaign has an average position of 2 and an average cost per conversion of $10. By attempting to increase their average position to 1, their cost per conversion will increase as they will be paying a higher cost per click.

Important factors to consider as a business are the rate at which a lead turns into a job or sale – and how much that conversion is worth to you.

If leads generated at a cost per conversion of $10 turn into jobs worth $300 or more and your lead-to-sale rate is good, then there is certainly room to increase your cost per click – and in turn, your ad position – while still achieving a great ROI.

However, if these same leads are only turning into $100 jobs and your lead-to-sale rate is poor, then we would want to aim to reduce your cost per conversion in order to improve your ROI.

We’re proud to be a Google Premier Partner and our focus is all about ensuring each of your campaigns are running at the best possible ROI, because this is what improves your business’s profitability.

Generating more leads or sales is absolutely the aim, but spending the budget to make sure you’re always on top and then only breaking even isn’t smart business.

Of course, as with all advertising, being seen is key so there is definitely merit in having your ads appear in the spots above the fold – within the top four positions – so they are shown before the top-ranking organic results.

By optimising search ad campaigns to deliver the best cost per conversion constantly delivers far better results for our clients and it can improve your business’s marketing ROI.

If you’re wondering whether your Google search ads are delivering you the best possible ROI or if there is room for improvement, contact the digital marketing experts at Kook today.

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