Arrogance falls by the wayside when you are shelling out the money, taking risks with your business and Google is dipping into your credit limit every month. Searchers don't want to deal with your arrogance either. This story is revealed best in the management of Google AdWords. When it is your card being charged, the information telling you what does or does not get clicks, is in urgent demand.
Relevance Equals A Google Reward
Traditionally, you get higher positions on the search page by bidding more. But when your clickthrough rate goes up, Google actually gives you better positioning without charging you more per click. It rewards you for being relevant.
Basically, the number one position always goes to the top bidder. However Google has a long standing tricky little twist. This is the boiled down view of the formula:
Your Relative Position = Your Bid Price x Your Clickthrough Rate
The more precise explanation of the equation is: your bid price x you Quality Score. But whichever one you use, your click-through-rate makes the biggest impact, besides your bid price.
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.
If you are getting a good CTR, you won't be required to have as high a bid for a good position. It works like this; I bid one dollar and the ad gets a click through rate of one percent, and your ad gets a click through rate of two percent. You will be able to get about the same position as I do with only a bid of 50 cents. With a 51 cent bid you will get a higher position than I have. Say you already have top position; Google will charge you a lower bid price as your click through rate improves, without you having to do anything. Nice!
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.
