Google AdWords: the dilemma

The dilemma of any PPC manager: Rotating Ads or Optimising Ads?

As a Google AdWords consultant you will be surely asked on which option is better: set ads to rotate or to optimise.

The marketing agencies, in Perth and worldwide, face most of the time this dilemma when optimising their AdWords campaigns.

Google's default setting is "optimize," so if you have multiple ads in one ad group, your better performing ads (generally those with a higher CTR) will be shown more often. However... is CTR your measure of success? The more experienced PPC advertisers know that clicks are not always considered a good measure of success. Instead, conversions -- sales, leads, sign-ups, downloads and other desired outcomes -- are considered better measures of Google AdWords performance.

People always tend to set ads to "rotate" to satisfy my craving of juicy PPC data. Rotating ads could be detrimental to profitability.

Why? Because by rotating ads, you are accepting a lower Quality Score and a higher average CPC in exchange for better analysis data.

Let use an example.

Suppose you had two ads in an ad group (ad 1 and ad 2). Ads were set to rotate, so each was shown an equal 1,000 times over the month. Ad 1 was the best performing ad in terms of CTR (3.0%), delivering 30 clicks over the month. Ad 2, with a CTR of 1.0%, delivered only 15 clicks.

• Ad 1: 1,000 impressions, 3.0% CTR, 30 clicks

• Ad 2: 1,000 impressions, 1.5% CTR, 15 clicks

Now let's look at the totals for the ad group. From 2,000 impressions on both ads, 45 clicks were delivered at an average CTR of 2.25%.

Ad Group Total: 2,000 impressions, 2.25% CTR, 45 clicks

Now let's consider what would happen if the ads were set to optimize, where Google chooses which ads to show based on their CTR. We know that Ad 1 has a considerably higher CTR than Ad 2, so to increase their advertising revenue, Google would choose to show Ad 1 more often. Ad 1 gets 2,000 impressions; Ad 2 receives 500.

• Ad 1: 2,000 impressions, 3.0% CTR, 50 clicks

• Ad 2: 500 impressions, 1.5% CTR, 10 clicks

Look at what happens to click volume for the ad group. Since the ad with the higher CTR is being shown more often, more clicks are being delivered. For the 2,500 times both ads were shown, click volume has risen from 45 to 65 -- an increase of 44%.

Ad Group Total: 2,500 impressions, 2.6% CTR, 65 clicks

Average CTR for the ad group has increased from 2.25% to 2.6%. Setting the ads to "optimize" has delivered 44% extra clicks for no extra effort.

But as we pointed out earlier, clicks are not the only factor that matter -- it is conversion volume which is more often considered a measure of success. Those extra clicks may just be increasing my costs for no improvement in conversions! Aren't I better off deciding myself how often my ads get shown?

You are maybe getting lost... I am as well! Search Engine Marketing campaigns are not as easy as open your browser! Having your marketing consultants will help you on getting better results and be followed from a specialist when consulting an AdWords consultant.

The Importance Of CTR

Google loves relevancy. They want their user experience to be as great as possible, and they reward CPC advertisers who provide highly relevant ads. They do so with a Quality Score metric, scored out of 10.

CTR is the most important measure of Google's Quality Score, so the higher your CTR, the more likely searchers (and Google) think your ad is highly relevant.

All other things equal, a higher Quality Score means a lower average cost-per-click (CPC) price or a higher ad ranking.

Since our optimized ads have a higher CTR than our rotated ads, it is fair to say they will receive a higher Quality Score, perhaps an 8 instead of a 7. If ads were shown in the same average position, it is also fair to say that the optimized ads (with a higher Quality Score) will have lower cost-per-click prices, perhaps by 10%.

This means that by setting ads to rotate, you are accepting a lower CTR, lower Quality Score and higher CPCs for better quality data.

The PPC Manager's Dilemma

Which is better?

1. A higher CTR, higher Quality Score and lower CPCs, or...

2. The ability to conduct more reliable ad text analysis?

You can't have both. Setting ads to rotate is inevitably accepting a reduction in CTR, a lower Quality Score and an increase in CPC prices, but allowing for more insightful ad text analysis. Setting ads to optimize is delivering extra visitors, each at a lower cost, but at the expense of meaningful comparative ad text data.

Supporters of the "rotate" setting might suggest that if ads are optimized regularly based on CTR, it is possible to increase Quality Score over time. However regularly ads are optimized, there will always be a loss in potential CTR and an increase in CPCs during the testing period, where your low CTR ads are shown instead of those with a higher CTR.

Of course, it is generally more important to optimize ads based on conversions, rather than just CTR. But unless you can be sure that one ad is going to convert at a significantly higher rate than another, is it really worth paying a higher price just so you can conduct better ad text analysis?

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