I recently had a client who we were running a large campaign for where the client had an abundance of different categories and words which we were targetting their ads at. We had done broad keyword research, setup around 17 categories with ads all worded and targetted at these categories.



The client was spending around $100 per day on adwords and we were easily filling this my mid morning as the breadth of their keyword list and categories was huge, and some of the terms being targetted were quite broad also (this customer was targetting the home improvement market - with a consumer audience).

Ok, on to the point: The client pressed me to experiment with a drastically lower CPC than we were using. We were targetting positions 2 - 4 on average and paying around $0.50 - $0.60 per click for website visitors, and it was converting nicely at around 28% (their conversion actions were fairly easy for users to take hence the high conversion ratios). I was convinced based on various prior experiences that lowering the CPC, would of course lower the ad position, and that with less people seeing the ads, and seeing them buried down a long list of advertisements, the conversion ratios would surely plummet and the overall cost / conversion would go up - making their campaign less effective.

Boy was I wrong!

OK - so there was a drop in conversions, but it didn't go from 28% --> 5% or even 28% --> 15%....their conversion ratios only dropped a little to around 25%. Their cost per click however COLLAPSED!! They went from paying around $0.55c on average per visitor to paying around 0.25c per visitor, and with conversions holding their ground, their cost / conversion also COLLAPSED!

The results:

* a) Visitor traffic doubled.

* b) Cost per conversion almost halved.

* c) Volume of conversions per day doubled!

The moral of the story:

While the client was spending a lot of money on adwords, I should make it clear from the start, that this approach really works best where you have a limited daily budget to spend on Adwords each day / month and which is being easily filled each day by clicks. If you have a very small but lucrative market you are trying to reach, and a big budget, you may be in a situation where you are bidding big prices in order to win the clicks of a small group of people, so lowering your (and ad positionining) in this scenario may not make sense.

IF however you have a very broad keyword inventory, and you're easily filling your daily click budget - I would strongly encourage you to do the following:

* 1. Download the adwords editor from Google which can be found here

* 2. Copy and paste the campaign or campaigns you are running and create a LowCPC variant of these which you can run side by side with the higher CPC campaign.

* 3. Lower your bid prices - halve them, go even further.....drop them to the minimum bids.

* 4. Sit back and watch carefully.

If you have your conversion tracking setup properly, then you should be able to clearly observe the variation in conversion %. From my experience now in trialling this approach for over 6 clients in the last few months, I predict that you will see a lowering in conversion, but in most cases not as far as you think and you will likely also see a drastic increase in the visitors, and conversions you are achieving within your limited budget. If you suddenly find you are underspending you daily click budget, then perhaps tune up the Max CPC / bid a little until you comfortably fill your budget, and observe the change in cost per conversions.

if you are in the situation described above, where you have a small budget you are spending Google Adwords each month, and a broad market you are targetting, this is highly likely to drammatically improve your return on ad spend, and potentially transform Google adwords as a channel to market for your business.

Clicks achieved in lower ad positions don't necessarily convert at a lower rate!! As with everything in online advertising....don't hold on to past prejudices about what you think works - just try it out and see what happens!