Generally speaking, all companies want to be at the top of SERPs–search engine results pages–when a lead searches for a keyword relevant to their business. However, it becomes more complicated when you get into paid Google advertisements and the effectiveness of your CTR–click-through rate.
Four factors affect the profitability of your Google ads and their ranking when you decide to undergo a campaign:
- Advertising Cost
- Advertising Volume
- Internal Cost
- Value of Conversions
The calculation of profits equals the number of conversions (purchases made or appointments set) multiplied by the value per conversion minus the advertising cost per conversion minus the internal cost per conversion. I.e., Profit = Number of Conversions x (Value per conversion – Ad Cost per conversion – Internal Cost per conversion).
So what exactly is it worth? How high should your business be aiming? And is it always worth it to be number one?
Google Ads Positions Affect on Profit
We get it; being at the top of the mountain with the competition underneath you feels like the best way to make the most profit, but is this always true? Let’s explore that in more detail.
As a rule, the higher you want to rank on the Google ads listings, the more money you will spend on advertising. While Google ads don’t have a fixed cost and vary month to month, most small to midsized companies rack up $9-10k monthly on average for Google ads. Of course, this increases if you want to make the top spot, but it’s more complicated than that.
Strategy and conversion rates vary significantly from industry to industry. For example, a fashion or beauty company often has window shoppers who can browse for hours and never buy anything. On the other hand, a roofing company may have someone looking for a roofing contractor to stop a leaky ceiling as quickly as possible.
Why Ranking Number 1 Isn’t Always the Best
Our ultimate goal as advertisers isn’t to simply have as many people land on our webpage as possible but to have those people be leads that convert into customers. At first, it may seem that more people means more conversions, but that isn’t necessarily true.
The answer to the age-old digital marketing question “Does conversion rate differ with ad position?” doesn’t have a clear conclusion. What is evident is that ranking number one will cost you more while not always resulting in more conversions.
As mentioned above, a business more prone to window shoppers may only receive superficial clicks from ranking number one, thus increasing how much they spend on PPC (pay-per-click) ads while not maintaining the profit they may be aiming for. On the other hand, an emergency service where someone is looking to fix a problem right away may convert to the first listing they see on the SERP while being far less picky.
Unfortunately, many first-ranking clicks will come from people who simply click on your ad because it’s first in line, not actually reading it or seeing if it’s relevant to what they are looking for. This results in them bouncing off your site and becoming irrelevant traffic. While some bounce-off rates are expected for every digital storefront, an excessive amount could require reevaluating your strategy.
Figuring Out What’s Necessary for a Profitable CTR
If you’re worried about your company spending too much on ads that won’t convert into leads, ask yourself these questions:
- Is the service or product I’m providing something someone can find anywhere else?
- How well-optimized is my website? Is it pleasing to look at and easy to explore?
- How much will my budget allow me to handle a specific ranking if it converts poorly?
- Am I willing to adapt my strategies if they don’t work?
Evaluating the service or products your business provides may save you time, money, and confusion about why the best money and tactics are doing nothing for your conversion rates. Alternatively, consulting with a digital marketing agency could also prove useful.
Doing What’s Best for Your Company
Becoming fixated on a higher Google ad ranking could mean you’re disregarding the efficiency and return for your advertising, which could put your company in financial jeopardy! Instead, you want to ensure profitability comes from your Google advertising and SEO campaigns, maximizing your conversions per click.
As with most things in life, it’s vital to research, analyze, and find a balance to achieve maximum results and even growth. Sometimes this is easier said than done, however.If you need advice, expertise, or even help with strategy, reach out to us here at Optimize4Success. As one of the leading digital marketing agencies out there right now, we’re dedicated to helping businesses both big and small maximize their ROI and create customized strategies around their industry. Your business is unique and deserves a custom approach to its digital advertising campaigns.