In Pay-Per-Click Advertising, Beware of the Number 1 Spot

By Boris Mordkovich

Pay-Per-Click advertising works in an auction-based format, since there are a number of advertisers competing for the same keywords. The higher you bid, the higher your ad appears. Bids can range anywhere from a few cents to several dollars per click, based on how competitive the industry is.

By its nature, Pay Per Click is a very dynamic form of advertising. As new advertisers come and go in the marketplace, bid prices change on a daily basis. When you’re just starting your Pay-Per-Click ad campaign, it’s important to research what other advertisers are paying. Yahoo, for example, offers a free tool that lets you check how much your competitors pay for specific keywords. The tool is available at uv.bidtool.overture.com/d/search/tools/bidtool/.

Keep in mind that the bid prices can vary tremendously based on the popularity of your keywords. A general keyword, such as “web hosting” might be twice as expensive as opposed to a more targeted keyword, such as “windows business web hosting”. As an advertiser, you can bid on as many keywords as you wish – there are no limits. Most of the successful advertisers start off with 500-2,000 keywords and add on more as they go along.
There are a number of tools available on the market that can help you find these keywords. They include KeywordDiscovery.com and WordTracker.com, plus most of the search engines also offer their own versions of keyword research tools.

One of the most common advertiser pitfalls is that they feel that they MUST get the #1 position to get results. But, that’s not necessarily the case. By default, Google and Yahoo show around 10 sponsored ads. The top positions tend to get a lot of clicks from people that aren’t exactly sure of what they are looking for or those that are just starting to shop around. As the visitors proceed to the 2nd, 3rd, and 4th advertiser on the list, they get a better idea of what’s available and tend to settle down with their choices.

Research has shown that the best positions are between #2 and #5, as they tend to be the golden middle between getting the best amount of traffic and the best conversion rates. It’s interesting to note that while the traffic volume decreases as you go down the ranks, the conversion rates actually tend to increase.

It’s still important to keep your ads in the top, however, as those tend to get a lot more exposure through search engine distribution and syndication partners.

My recommendation would be to start somewhere in the middle and slowly increase your rank while keeping a close eye on your return-on-investment. For popular, general keywords, being in the middle should yield the best return. For lesser known, more targeted keywords, you should be able to bid on higher positions and get the most out of that targeted traffic.

This will allow you to grow your volume without the risk of blowing your entire advertising budget on inefficient ads.

Writer’s Bio: Boris Mordkovich is the Director of Operations at at MordComm, Inc. The company operates services, such as AdWatcher.com – Ad Tracking & Click Fraud Monitoring tool and AdScientist.com – Automated Bid Management software, as well as the first and only print magazine dedicated to search marketing – SearchMarketingStandard.com

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