CTR and impact on CPC

Hello. My apologies in advance if some variation of this question has been asked 100x over. I couldn't find it.

I am hoping that you can tell me if this could be correct.

Search Term: [x]

August '07: Avg. position-1.2 CPC: 1.59 CTR: 6.6%

August '08: Avg. position-2.3 CPC: 2.00 CTR: 2.96%


Is it possible that being in the #1 spot (depending on sale price/margin) generates such a better CTR that it helps your CPC to the point of making more sense than being #2 or 3? Sure you pay for more junk traffic and your overall spend will be more, but you get so much more traffic and the CPC isn’t much higher than being #2...maybe even lower? Some of our cpc increase in '08 is surely due to competition, but I am wondering if jumping to #1 will sky rocket our CTR thus making the increase in CPC minimal...but the traffic and conversions significant.

Possible? What can a difference of 3-4% in CTR do to CPC?

Hopefully this question makes sense.

Thanks~~SEON

Regardless of CTR, if visitors will be coming to your site and ain't still convinced, you end up spending higher adwords cost and no return from it. This problem also relates to the keywords being targeted (mismatch or not exactly to site services/goods, or lacking in specific)

You can experiment on improving more on landing page quality.

Ending up a lower traffic because of lower CTR can be more profitable to a higher traffic (because of higher CTR) if buyers are convinced your page can give the things they want.

Thanks for the reply. Yes, I understand the importance of landing page both in terms of user experience and its importance in Adwords quality/relevancy score. Assume the landing page does what it is supposed to do. Can the increased CTR (3-5%) offset a jump in max bid?

Example:
I am paying 2.00 max cpc in the 3 spot with a CTR of 2.5%

or paying 3.00 max cpc in the 1 spot with a CTR of 6%.

Could I find that the difference in cpc is actually pretty insignificant after a bit of a history with a significantly higher CTR? Should I see it starting to drop?

Thanks~~SEON

Can I know your targeted keywords for that?

Hi PPCNirvana,

Is it possible? Yes.

When you've been doing PPC long enough you will learn that things can and often do vary a great deal with each keyword.

While the CTRs may improve with increased CPC, what really matters is cost per conversion. Often increased CTRs result in lower conversion rates and higher costs per sale.

Believe me when I say that what works for one keyword typically does not work for another. You have to test everything. When it come to Internet advertising, the only thing that is consistent is inconsistency.

May be the visitors would be unable to get desired information to your website when he came through your Ad click. Possibly what services you offered in your Ad are not available on landing page... Also check your keyword phrase...