That Google should say that an AdWords advertisement's position on the page affects its conversion rate by only about 5% results from their having an enormous amount of data which they are considering in toto. If they were to consider the data from an individual advertiser's standpoint, the statistics would appear very different. Just as relevancy is so important in a Google AdWords ad itself, so it must be in analyzing the statistics.
Advertisers sell or market different products or services at different prices. For Google to issue a blanket statement that covers all advertisers is misleading.
Some AdWords facts
– The ad in position # 1 gets 8 times as many clicks as the ad in position # 5.
– The ad in position # 4 gets 2 times as many clicks as the ad in position # 5.
– Positions # 5 to # 9 are almost identical; position # 10 drops to 25% of these.
– Position # 3 gets 25% more clicks than position # 4.
– Position # 2 gets 100% more clicks than position # 3.
– Position # 1 gets 60% more clicks than position # 2.
Actual figures are:
Position :: CTR
# 1 ::::::: 7.94%
# 2 ::::::: 5.00%
# 3 ::::::: 2.47%
# 4 ::::::: 1.96%
# 5 ::::::: 0.90%
(Figures obtained from a survey of 1,200,000 clicks.)
The reasons for this are psychological. The sponsored ads in positions # 1 to # 3 are located immediately above the organic (free) search engine results, and look very similar to them. It is natural for people to click on the ad at the very top-left of the page. Ad # 4 is at the top of the narrower column at the right, while ad # 10 is at the very bottom and tends to all but ignored.
– To move an ad from position # 5 to position # 4, you must either:
1. Pay more per click, or
2. Improve ad text and landing page relevance.
– Most web sites have a conversion rate of> 2%. To achieve this, either:
1. Ensure that the landing page is the actual product page, not the 'home' page, or
2. Display a custom page that corresponds exactly to the search query that the visitor entered. (This is known as "parroting".)
Why Google's "5% difference in conversion rate" statement is misleading
Do not be fooled into thinking that the click-through rate is directly proportional to the conversion rate (and thenby profits). Most certainly it is not! Although Google says that ad positioning has little effect on conversion rate, this is because such a statement is based on all ads across the entire spectrum of products and services, and they even themselves out.
It is more likely, however, that "tyre-kickers", product researchers and price-comparers will click on the ads in the higher positions, thereby increasing the advertiser's costs without a sale.
On the other hand, visitors with a high "online commercial intent" (OCI), ie, those who are ready to buy are just as likely to click on an ad in a lower position as they are in a higher position, because they are studying several options carefully before spending their money.
Proportionally, therefore, ads in lower positions have a higher profit margin than those in higher positions.
This effect becomes more highly marked as the product price increases and the more competitive the product price is. In other words, people are more likely to compare prices, when the product costs more, and are more likely to buy from the site with the lowest price, best service, etc. Then your ad might as well be in a lower position for which you pay less.
Conversely, if the product is low-priced for quick turnover, requiring little thought on the buyer's part, the higher ad positions would result in greater overall profits.
Be all this as it may, there is always one inescapable fact. Although certain markets are larger than others – and some are huge – they are all finite. Sooner or later an advertising campaign's profits will begin to tail off and drop, however it will be because the market has become planned or because so many competitors have jumped onto the band-wagon.