CYBERSPACE — Acronyms like CPC (cost per click), CTR (click-through rate) and CPA (cost per acquisition, or conversion cost) are so firmly cemented in internet marketers’ lexicons it’s doubtful even dynamite could dislodge them.Less a foregone conclusion, though, is how well marketers and analysts understand the terms on more than a superficial level.
If you’re one of the Web gurus who views site and sales metrics as distinct entities that are wholly independent of external advertising variables, the kind folks at AdGooroo politely request you adjust your thinking, and the sooner the better.
“In a study conducted by the AdGooroo research team in early 2008, we attempted to measure the exact relationship between cost-per-click and click-through rate,” notes a statement on the company’s website. “More importantly, we measured how these critical campaign metrics were affected by the length of the searcher’s keyword phrase as well as the average position in which the ad appeared on Google AdWords.
“The end result of this study was a proprietary index (the ‘AdGooroo search index’) which illustrates how these relationships change across the entire range of ad positions on Google.”
In a nutshell, by analyzing a selection of 333 keywords the AdGooroo team found an interesting relationship between pay-per-click advertising rate, profitability and keyword length — and it’s not what many marketers probably expected. Generally speaking, the team advised, it’s not profitable to bid for high positions in Google AdWords when short keywords (one word or two-word phrases) are involved. Instead, for the most bang for the buck, aim for fifth or sixth place.
However, big-brand advertisers are advised to take a different approach. Any appearance above fourth should be considered a branding move, AdGooroo noted.
The picture changes when longer keywords come into play. According to AdGooroo, the most profitable position for three-word and longer keyword phrases is second or third place. Eschew first position, the team advised, because first-place positioning nearly always loses money in the CPC-CPA-CTR matrix.
A PDF containing AdGooroo’s study results and recommendations is available here: http://www.adgooroo.com/delivery.php?literaturerequest=11.
