Andy Black
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With AdWords paid search, doubling your bid price moves your ad higher up the page where you’ll get twice the CTR (mileage will vary obviously, and this doesn’t work if you’re already in top ad position).
So you’ve doubled your traffic volume.
THEN, because there are less advertisers competing for the higher ad positions (because they can’t afford the higher CPCs), your ads show more often in that higher ad position. Let’s say twice as often (aka your Impression Share has doubled).
So your ads are showing twice as often, in a higher ad position where you get double the CTR.
Which gives you quadruple the volume.
The double whammy benefit is that if you doubled your CPC because you managed to double you conversion rate and you’re just going back to your previously profitable CPA, then you’ve ended up with 8x the number of conversions.
It’s a beautiful thing when it happens.
However, there’s a downside. If you halve your CPCs, then you’re going to end up with 25% of the traffic.
So it’s knife edge stuff. Your performance can go through the roof, or crash and burn.
A sure fire symptom of you being on the wrong side of the algorithm is if you keep pushing bids to maintain ad position and maintain click volume. That means Google’s AdWords algorithm prefers your competitors campaigns to yours. You can’t really bid your way out of it (although of course it does help a bit… hence Google’s common canned advice to “bid more”).
So you’ve doubled your traffic volume.
THEN, because there are less advertisers competing for the higher ad positions (because they can’t afford the higher CPCs), your ads show more often in that higher ad position. Let’s say twice as often (aka your Impression Share has doubled).
So your ads are showing twice as often, in a higher ad position where you get double the CTR.
Which gives you quadruple the volume.
The double whammy benefit is that if you doubled your CPC because you managed to double you conversion rate and you’re just going back to your previously profitable CPA, then you’ve ended up with 8x the number of conversions.
It’s a beautiful thing when it happens.
However, there’s a downside. If you halve your CPCs, then you’re going to end up with 25% of the traffic.
So it’s knife edge stuff. Your performance can go through the roof, or crash and burn.
A sure fire symptom of you being on the wrong side of the algorithm is if you keep pushing bids to maintain ad position and maintain click volume. That means Google’s AdWords algorithm prefers your competitors campaigns to yours. You can’t really bid your way out of it (although of course it does help a bit… hence Google’s common canned advice to “bid more”).
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