With one client in particular over the last few months we had noticed a drop in the performance of their brand group. Although impressions had remained fairly consistent, CTR had been falling. We were seeing fewer clicks and as a result fewer conversions from their brand terms. This client does experience significant seasonal variations but what we saw didn’t align with these. There was also no increase in competition on these keywords and ad position had remained the same (roughly 1.2) over this time. The keywords have all maintained a quality score of 10/10.

A few live searches revealed a potential cause. Although our ads were appearing in position 1, they were appearing on the right hand side of the results page, rather than in the banner at the top. In this case there were no banner ads at all. But why was this? We hadn’t made any significant changes to bids or to the ads and the keywords and ads couldn’t be better targeted.

Investigating a bit further revealed something quite interesting. Within the AdWords interface we could see that the keywords where CTR had fallen all had bids of 1p. Anything with a maximum bid of 1p had a CTR between 2% and 14%. Anything with a maximum bid of 2p or higher had a CTR between 16% and 55%, though averaging 31%. This was quite a distinction.

My theory is that Google have made some changes to the algorithm used to promote ads into the banner position, and these have had the effect that even when clickthrough rate and quality score are high, a bid of greater than 1p is now required to push ads into those banner positions. No matter how well your ad group is performing, if you don’t bid at least 2p you’ll be appearing on the right hand side of the page, where CTR will be significantly lower.

I tested this by increasing all 1p bids in the ad group to 2p, left these to run for a week and then checked the results. And the results were conclusive. Overall CTR for the ad group increased from 17.6% in the week before the change to 25.4% in the week after. Average CTR for the most popular keyword in the group increased from 3.9% to 20.4%. When performing a live search keywords now appeared consistently in the banner position. Interestingly, from one week to the next average ad position for the group actually fell from 1.2 to 1.3, showing that a change in ad position was not the cause.

So, it may be worth looking at your own PPC campaigns and applying a campaign-wide minimum of 2p to all bids, and certainly for those key brand terms where visibility is so important.

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