Study: Size May Not Matter, But Ranking Does

A benchmark report released by Atlas DMT reinforces what many search engine marketers already know: the relative position, or ranking, of paid search keyword listings is of critical importance.

According to the research, there is about a ten times difference in potential traffic between the first and tenth paid search position rankings. The results also revealed major differences between the two search providers. The study was conducted in May and June 2004 on 55,913 Google keywords and 62,635 Overture keywords purchased by clients of Atlas Search. The keywords were purchased for use in the sponsored listings sold by Google and Yahoo’s Overture.

“There is a 40 percent drop between Google’s No. 1 search ranking and its No. 2 search ranking, suggesting that the top position may be the wisest buy with Google,” said Young-Bean Song, director of analytics and the Atlas Institute. Atlas DMT is an advertising technology provider and an operating unit of Seattle’s aQuantive. Atlas Search is an automated search campaign management technology owned by Atlas DMT.

With Yahoo-owned Overture, “the decline you can expect in traffic based on rank is much more smooth,” Song said. “Taking the number two spot is a better strategy on Overture than it is on Google.”

Rank isn’t always the most important consideration, Song emphasized. “Rank, cost and volume are the three most important variables.” Paying for the number one ranking may not be the best strategy for all advertisers, he said. “For some marketers the cost of traffic associated with the top ranking may be too high.”

At the end of the day, advertisers will develop their own benchmarks, based on their own data, Song said.

Melissa Burgess, director of business development at search engine marketing firm Impaqt, concurred.

“I think every agency should do data mining of their own to see what does and doesn’t work,” she said.

Because there is such a large number of variables, the study should not be taken as a hard-and-fast guide, Burgess said.

“Your clickthrough is going to depend on your title, your description, how recognizable your brand is. These things play considerably into the mix,” Burgess pointed out. For example, she said, even if a Nike paid listing has a number three ranking, it will still get a good number of clickthroughs because it has a strong brand identity.

Kevin Lee, CEO of search engine marketing firm Did-it.com, concurred.

“Each marketer must use an intelligent system and custom strategy to determine the right price and position for each keyword in every engine,” Lee said in an email message. “I’m pleased to see Atlas release this data. Data like this is very useful for marketers who have not had the opportunity to expertise the specific differences in clicks by position, within their own campaigns.”

However, Lee said, averages, while they convey important concepts about positions and traffic, don’t tell the whole story. “Conversion rates change based on position, so while a marketer may get more traffic at a top position, their ROI is impacted not just by the higher cost per click but also by the reduction in conversion rate. So, marketers have to figure out the best position for profit and ROI.”