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.
Relevance Equals A Google Reward
One way for your ads to get a higher position in the search pages is to bid more. A better way to position higher is to be rewarded by Google for your higher click-through-rate. Google will give you a higher position without charging you more per click. It is a reward for relevance.
Roughly speaking, the first position has always been given to the highest bidder. But Google has long maintained an ingenious little twist. Here's a simplified version of its formula:
Your Relative Position = Your Bid Price x Your Clickthrough Rate
To explain more exactly, the formula takes your bid price and multiplies it by your Quality Score. Either way you do it besides your bid price your click through rate has the greatest impact on your position.
Which CTR, exactly? The CTR of your individual keywords as they perform on Google alone, not the total CTR of your ad groups, not the CTR of any of your ads, and not the CTR of your ads as they're performing on Google's search partner sites or AdSense.
If you have a high clickthrough rate, then you don't have to bid as much for the position. For example, I bid $1 and my ad gets a CTR of 1 percent. Your ad gets a CTR of 2 percent. You can get the same average position as me by bidding $0.50. If you bid $0.51 then you'll get the position above me. If you're already in top position, Google will automatically charge you a lower bid price as your CTR improves. Not bad.
Even though this may seem magical, it isn't. It does mean you are shelling out less money each month to Google and that means more money heading to your bank account.
