Initial PPC Ad Positions are critical to your overall success.

What positions do your ads usually take in PPC?

When you launch a website or just begin advertising a product, one of the most important things you should consider is the PPC position of your ad.

Before you get started, you have to understand Google’s standpoint on this. Put simply, the more people click on their ads, the more they profit, so it is in their best interest to reward well-performing ads and de-emphasize underperformers. Google does this by looking at two things, your cost per click and your click-through rate. The formula looks like this:

PPC Ad Position = CTR X CPC

As you can see, one way to earn a great ad position is by having a massive click-through rate. Unfortunately, this can be really difficult when you launch because you haven’t yet tested what your audience is most responsive to.

Before you start thinking about maximizing performance with little ad-spend, remember this critical piece of information: Google starts recording your ad performance right from the start, but since your ad has no prior CTR performance, Google assumes average CTR and looks at how much you’re willing to spend. This is what determines the ad’s initial position.

Because of this, you may want to consider spending a little more on your ad to “buy” a good position initially. Studies show that ads showing up above the users’ fold perform much better, so this will give your ad a strong CTR (also keep in mind though that ads placed ultra-high can get more compulsive clicks, which are generally less profitable). Once your ad receives a few hundred clicks, Google will insert that data instead of assuming “average PPC Ad performance.” Now do you see why it’s important to get a great location from the beginning? If your ad does poorly and Google inserts that data, say goodbye to your positioning. Once you’ve developed a good CTR for your ads, you can then start to tweak your bidding to bring your spending down while also increasing performance.

Summary

When you are just entering the war for PPC Ad Position, you might consider using your ads’ lack of history to your advantage. Bidding higher initially can give your ads a great position and thus let them develop excellent historical CTR values. From there, you can tweak your ad-spend to decrease cost while maintaining or boosting performance.

If you are interested in learning more about making AdWords work for you, you can check out AdWords System Exposed to read more insights like this for every facet of your campaign.

Update: Here is a pretty good follow-up post for great ad positions, with several more things you should consider.