Folks are drawn to relevant ads. The way to be successful with Google AdWords is the have relevance. Folks will click on your relevant ads. You will be rewarded by Google because of it and your costs will drop and your Profits will increase. This is because of your relevance.
If you are the businessman, paying out the cash yourself, risking everything, with your charge card being drawn on each month to pay for all those clicks, you won’t waste time with self-importance. Your customers don’t want to mess with it either. The place that tells this tale the best is with your AdWords management. When you are the one risking it all, what gets clicks and what doesn’t is a very fascinating topic.
Google Rewards You For Relevance
If you bid higher for clicks you can get a higher position on the search pages. However, as your click-through-rate increases, Google will reward you by giving you a better position on the search pages. That is to say they reward you for relevance.
Essentially, the top position has always been awarded to the person with the high bid. But with this twist, here is the formula that has been used by Google to determine the order that the ads come in:
Your Relative Position = Your Bid Price x Your Clickthrough Rate
The fuller version of Google’s formula is your bid price multiplied by your Quality Score. Either way, your CTR swings the biggest difference apart from the price you bid.
What click through rate are we talking about here? It could be your ad group click through rate, or either the click through rate of your ads for search partners or AdSense, but that is not what we are talking about here. We are talking about the click through rate of your individual keywords and their Google performance alone.
With your good click through rate, you don’t have to bid as much for a good position. IE: If I put a bid of 1 dollar and I am getting a 1 percent click-through-rate and your ad get 2 percent click-through-rate, then you will be able to get the same position as I have for a mere fifty cent bid, and if you bid only one cent more than that 50 cents you would get a better position. To top that, if you already own the top position, as your click-through-rate increases Google automatically lowers your bid price. Way to go!
This isn’t magic, even though it looks like magic. It means you’re coughing up less money to Google every month, and you’re putting more in your own pocket every day.