Removal of Average Position

 

Are Google Ads taking our control away?

You may have seen the recent news that Google is sunsetting average position at the end of the year, which is a huge change and has had a lot of coverage in the last few days.

Those in the industry have always accepted that average position alone isn’t the perfect metric, there’s a great piece on this I read a while back. For the purposes of this blog post, let’s consider average position when used in the correct way with consideration of impression share metrics.

Here is our take on this announcement.

Why does it matter?

Think of this scenario, to keep it simple the advertiser is aiming to send as much traffic as possible within a set budget:

  • You notice you have an impression share of 50%
  • Losing 50% to budget, as you are maxing out your budget
  • You are consistently in position 1

Average position is one of the most fundamental metrics in PPC, for the obvious reason that it tells you where you have been appearing. In the case above it’s likely that the advertiser is not properly utilising their budget, as they are appearing in position 1 only half of the time (50% impression share)…so it would make much more sense to aim for a lower position and get clicks with lower CPCs, generating an increased impression share and likely more traffic for your budget. You then optimise for position until you hit the sweet spot for your campaign.

It’s such a fundamental consideration…we run many positional bid strategies for our clients as it’s such a key metric to optimise for.

So is optimisation over?

Now that I’ve had time to digest this announcement, I don’t think it’s that drastic and as ever these changes just mean a shift in strategy. We’ll still be able to optimise the above situation but we’ll have to approach it in a slightly different way.

So let’s consider the situation again:

  • You notice you have an impression share of 50%
  • Losing 50% to budget, as you are maxing out your budget
  • You are consistently in position 1 (We’d see we were “absolute top”)

We now need to consider what metrics we now have at our disposal, the main ones are impression share data:

  • Impression Share
  • Lost to budget (campaign budget settings)
  • Lost to rank (losing positions due to bids)
  • Absolute top and top metrics

Google has also rolled out some new ad position metrics, so we’ll be able to see the percentage we are in the absolute top (position 1) and top positions (up to 4) as well as the impression share metrics to go with them.

Based on this we have only actually only really lost the detail of positions 2-4, but have gained impression share metrics within this set of positions, so we should be able to test optimisation within this.

Our new challenge will be to optimise visibility within budget without dropping out of top positions if we want to maintain visibility and traffic.

Positional bid strategies lead to a negative auction sprial for Google, not good when they are trying to maximise revenue on search results

So why has Google changed?

From time to time we see changes to Google Ads that are not in our favour, this is undoubtedly one. You might be thinking why would Google, who have lots of useful data to share with you, introduce something that actually reduces your information and in turn reduces your control? The answer is probably in the way advertisers typically optimise for the above scenario we discussed:

Often the tactic when the budget is reduced would be:

  • Optimise positions down, to maximise impression share and ultimately clicks
  • Often assisted by bid management, aiming for a set position (say 3.8 to come in at the bottom of the top)

The above situation is not good for Google. Imagine you have a number of advertisers using bid management to optimise the bids down to hit a lower position, inevitably you’ll end up with a downward spiral of CPC’s as advertisers compete for the lowest position rather than the highest. So I guess it makes sense for them. Actually, AdWords removed positional bid strategies in 2011 so this has always been coming!

What do we do?

First things first, no need to panic as the change will be implemented later in the year. We have already started to test target impression share strategies for our clients which have been working well so we would recommend testing these in the meantime

When it does happen, we’ll need to shift our focus a little to these areas:

  • Essentially we’ll have 2 ‘positions’; Absolute top and top
  • If the budget is limited, optimise to impression share metrics to lose to rank over budget
  • Utilise impression share metrics for the top and absolute top

We’ve used a fairly simple example, but as long as we continue to think tactically within PPC we’ll continue to deliver value for our clients. Until bid management tools update later in the year, it’s important to test impression share strategies in Google Ads in the meantime. We’ll post an update soon on our findings from the tests we’ve been running.

Get in touch if you would like to work with us.

Paul Henderson – Founder & MD

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