Paid search remains a highly effective way for businesses to attract new customers. However, the landscape of pay-per-click (PPC) advertising has evolved significantly, rendering past strategies ineffective.

This post will explain why relying on low click-through rate (CTR) PPC strategies or focusing on specific ad positions is no longer beneficial. Instead, I’ll highlight methods to enhance the return on investment (ROI) of your paid search campaigns.

Rethinking “Low CTR Strategies”

Let’s clarify what “low CTR strategies” entail. Primarily, there are two types. The first involves targeting broad keywords within your market, encompassing informational, navigational, and ambiguous intent queries. These keyword types consistently yield low CTRs. Secondly, actively aiming for lower ad positions to potentially increase conversion rates or deterring unqualified leads by modifying ad copy falls under this category. These tactics might have worked in the past, but today’s landscape demands a different approach.

Meeting Google’s Higher Ad Standards

Gone are the days of simplistic ads. Google now has elevated expectations for ad quality.

The figure above illustrates Google’s stringent expectations for expected CTR based on average ad position. Many ads fall short of these standards. To add to the challenge, Google continually raises these expectations, demanding constant improvement in ad quality. But why is this important?

Quality Score: Surpassing Expected CTR

Quality Score reigns supreme as a PPC metric. A high Quality Score translates to better Ad Rank, influencing CPC, Ad Position, and Impression Share. Extensive research reveals that Quality Score primarily hinges on exceeding expected CTR.

Our findings indicate that Google has subtly yet significantly altered the ad auction process in recent years, amplifying the importance of Quality Score.

• The average AdWords Quality Score currently stands at 5/10.
• This represents a decline from 7/10 four years ago.

This signifies Google’s heightened standards for advertisers, making it harder for ads to achieve comparable Quality Scores today.

With declining average Quality Scores, the value of a superior Quality Score in terms of cost-per-click discounts has surged by 200%. The figure above demonstrates Quality Score’s impact on increasing or decreasing CPC, highlighting its growing significance.

The Price of Low CTR Strategies: Financial Repercussions

Historically, some advertisers favored low CTRs to minimize click expenses. However, this approach is flawed. While pursuing a low CTR reduces click volume, it inflates the cost of those clicks. The table above reveals that such strategies can lead to a staggering 400% increase in cost due to penalties imposed on ads with low Quality Scores.

The Price of Low CTR Strategies: Reduced Visibility

Another drawback of low CTR strategies is Google’s selective ad display on search engine results pages (SERPs). Impression share, the frequency of your ad appearances, directly correlates with visibility. A lower impression share hinders your ad’s reach to potential customers. Our research highlights a strong link between Quality Scores and impression share. Each point increase or decrease in Quality Score results in an average gain or loss of 9% impression share, as depicted in the figure below:

High Quality Scores: Achievable Across Industries

Contrary to some advertisers’ beliefs, achieving high Quality Scores is not industry-specific. Given that Quality Scores are determined by surpassing expected CTR, statistically, half the advertisers will have below-average scores, while the other half will excel. Examining average Quality Scores across industries debunks the “impossible Quality Score” myth.

B2B Industry Quality Scores

The following figure compares B2B companies’ Quality Scores (purple dots) with overall data. The variance between B2B and other advertisers is minimal, with both highs and lows present.

Finance Industry Quality Scores

Despite having the highest average cost-per-click, the financial sector (yellow markers in the figure below) doesn’t face inherent Quality Score disadvantages:

E-Commerce Industry Quality Scores

Similarly, the competitiveness of e-commerce paid search doesn’t preclude high Quality Scores. The distribution (orange markers) again showcases both highs and lows:

The Importance of Quality Score: Beyond CPC

While some advertisers downplay the importance of CPC, focusing solely on profitability, a strong correlation exists between CPC and cost per conversion. Higher CPCs generally lead to higher CPAs. Even profitable campaigns with high CPCs can benefit from CTR and Quality Score improvements, leading to even greater profitability.

Dispelling the Position-Conversion Rate Myth

The notion that ads in specific positions, like position three, magically yield better conversion rates is a fallacy. Analyzing conversion rates across thousands of AdWords accounts reveals no inherent relationship between conversion rate and average search position. External data from Google supports this finding.

When High CTR Backfires: Understanding the Anomaly

@larrykim an example: Notice CTR for “Free” ads is better and higher avg pos, but CPA is prohibitive even w/ low CPC pic.twitter.com/WmqJ4Maocu

— Sam Owen (@SamOwenPPC) March 21, 2014 This example shared by paid search expert Sam Owen presents an interesting anomaly. Ads labeled “free” exhibit the highest CTR (1.1%) but a surprisingly high CPA of $143.75. This suggests potential issues with keyword targeting or landing page relevance. Targeting “free” might not align with business goals despite its high CTR. User behavior could also be a factor. The allure of “free” might drive clicks without leading to conversions. A radical offer adjustment, such as providing genuinely valuable freebies, might be necessary. Here’s a similar experience and my approach:

Average Conversion Rates

Analyzing thousands of accounts revealed that the top 10% of advertisers achieve conversion rates three to five times higher than average, showcasing exceptional performance.

However, their success stems not from ad position but from optimized landing pages (offers, guarantees, unique selling propositions) and precise keyword selection. (The conversion rate data, sourced from our customers’ accounts, is based on various platforms, including AdWords and Bing.)

Unlocking Landing Page Unicorns: Boosting Conversion Rates

Landing page unicorns, like their mythical counterparts, are those exceptional landing pages boasting conversion rates three times or more above average. Here’s how I created one:

Transforming the Offer

My “free PPC software” ads, promoting a free trial of our software, consistently generated high CTRs but suffered from low conversion rates and a high CPA.

The solution wasn’t reducing CTR but enhancing the offer to improve conversion rates.

The Winning Offer

Introducing an AdWords report card that benchmarked account performance against competitors proved to be a game-changer. This new offer quadrupled conversion rates compared to the previous one.

This highlights that high CTRs coupled with low conversion rates might indicate other underlying problems, such as an ineffective offer.

Eliminating Low CTR/Quality Score Keywords

Here’s the most compelling reason to abandon low CTR or Quality Score keywords: they negatively impact your entire account.

While some keywords perform well and exceed expected CTR, many fall short. One might expect a mix of high and low Quality Score keywords.

However, that’s not always the case. Notice how all keywords have Quality Scores ranging from 3 to 6. This indicates that low CTR/Quality Score keywords drag down the entire campaign’s and account’s Quality Scores and CTR, affecting even the high-performing ones.

Final Thoughts

It’s important to note that the data presented represents averages. Individual AdWords accounts might exhibit different patterns. However, the strategies discussed hold true when analyzing hundreds of thousands of accounts. Shift your focus from low CTR strategies to maximizing CTR by refining your targeting. Eliminate low-performing keywords that hinder your account’s overall performance. Consider leveraging remarketing and RLSA to amplify your paid search efforts.

Data Sources

Unless stated otherwise, the data presented is based on 240 US-based SMB accounts across various industries managed by nexus-security. The graphs incorporate data from the Google Search Network between January 2012 and July 2014.