Google just released some research by its chief economist, where they conclude that conversion rates don't vary much by ad position. The reason people tend to correlate higher conversion rates with ad position is that Google uses an internal algorithm to rank the quality of ads and automatically pushes higher in the rankings those that are higher quality. Therefore, the correlation is between conversion rates and ad quality, while ad position is just tagging along with quality. Google showed this by studying the conversion rates of the exact same ads across different positions. They found that there was less than a 5% difference in conversion rates across all positions, including top and right.
So what is the lesson to be taken away from this by PPC marketers? Worry a little less about bidding higher CPCs to get better positioning. Rather, focus more on ad content as it relates to associated keywords. Of course, this is not to say that in every situation Google's research will hold true, but it's certainly worth taking into consideration when deciding whether to increase bids as the tactic to get higher traffic.
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