If you’re currently advertising on Google AdWords, I want to ask you a simple question. Do you know what your ad position means?

OK, it’s a bit of a trick question. But seriously, do you know what ad position means in terms of how it will affect your campaign’s performance — or, more important, your return on investment?

There are countless articles that discuss the myths associated with position 1. No one in their right mind is going to strive to be dead last. There are also AdWords users who strive for the top page results while not going after position 1.

The AdWords system is built around complex algorithms and can be confusing, even to those with some experience using it. So, at the end of the day, what does ad position really mean? And why does it matter?

The Art & Science of Google AdWords [Ad Position]

At face value, ad position is where your ad stands against everyone else’s — against your competitors. It’s a pretty simple concept, but the problem is most people don’t really consider what their position means in relation to their goals or objectives. Not knowing this can be problematic for any advertiser.

Before we dive in further, let’s identify some goals and objectives that most businesses focus on. The most obvious category involves conversions, sales and leads. Another is creating greater brand awareness. There are several other types of objectives we can bring into the conversation, but we’ll stick with these for now.

When it comes to getting conversions, your campaign will obviously need to attract a significant amount of relative traffic (traffic that is related to the products or services that you are offering). So let’s say that your campaign is already seasoned and is driving a solid amount of relative traffic to your website.

Outstanding! As an advertiser, you can never get enough quality traffic, especially if it’s converting. However, there is one problem. While your conversion rates and other KPIs are looking great, you’re simply not pulling in the number of leads that you are targeting to hit your business goals.

Then you look at your ad position in AdWords. You are consistently in position 1. This must be good if you’re ahead of your competition, right? Not necessarily.

Position 1 in Google AdWords [Pros and Cons]

In the scenario described above, appearing consistently in position 1 could mean that you’re spending a lot more than you need to — potentially burning through your budget more quickly and getting less bang for your AdWords buck.

While your data may indicate that you are dominating the competition for your selected search terms, this result could be short-lived if the higher cost of appearing regularly in position 1 ends up exhausting your budget.

Reality check: Position 1 may not always be as desirable as it sounds, particularly if it is consistently draining your daily budget and limiting the number of leads you are receiving. In fact, there are some industries where the price of appearing in position 1 can be nearly double your Cost Per Click (CPC) when compared to lower positions.

The best way to combat this is to find other ways to maximize your budget and not worry about position 1. To start, consider bidding for a lower “top of page bid” instead of position 1. If you’re already getting great stats and traffic, there is no need to be in position 1. Maximizing the amount of traffic should be your main objective because this will align with your goals of getting more leads and conversions.

How Position 1 Can Help Your AdWords Campaign

So we understand that position 1 doesn’t always matter, but are there also times when it does? The answer — as you have no doubt guessed — is yes.

Though some advertisers may not know this, it is completely fair game to bid on your competition’s company name, as if it were a keyword. Your ad still has to reflect your business in some way, but there is nothing stopping you for bidding on the names of key competitors (just as there is nothing stopping a competitor from bidding on your name).

Knowing this, it is always good practice to create a branding campaign for your company. Think of it as a form of protection. If you are implementing a branding campaign, you definitely want to make certain you’re in the realm of position 1. If you’re not, make sure that you have measures in place to combat this, depending on the number of other advertisers and how aggressive they are.

Even if you find that this might not be an issue for your company, such branding strategy is still worth considering as it requires very little investment. Some might disagree, reasoning that it’s not worth spending funds that might be used more effectively in other campaigns (after all, the company will still rank organically for their brand).

While this point is valid, paid advertising can still take up a significant portion of the top search results. Yes, your customers and prospects may forgo clicking on top competitor ads, but is it worth risking the nominal cost of protecting your brand?

How Quality Score Relates to Ad Position

Of course, any discussion of AdWords strategy must acknowledge the importance of each ad’s Quality Score. When advertising online with Google, an ad with a higher quality score can be expected to receive better ad position and more impressions at a lower cost.

In a nutshell, quality score relates to how well your keywords align with your ad’s message and with the quality and relevance of the landing page that users are directed to when they click on your ad.

Impact of Lower Ad Positions in AdWords

We’ve addressed the some of the pros and cons of appearing in position 1 in a successful AdWords campaign. But it’s also worth exploring the impact of ads appearing in the lower positions. For example, while many advertisers assume that it’s not a good sign to be below position 4, this is not always the case.

While being below position 4 could mean that an account needs improvement, it could also mean that you’re in a very competitive industry and you just don’t have the budget to compete for your highest-priority search terms. In this instance, it may be worth conducting further keyword research to see if there are relative terms you can bid that are less costly or have less competition.

You can still expect to receive exposure and traffic in the lower positions. However, it will be important to closely monitor whether the results you are experiencing in continue to align with your goals and objectives. If not, then further optimization or a new strategy should be considered.

Bidding for top page positions that are below position 1 can be another strategy for getting the most out of your campaign in terms of traffic and budget. And of course, with a sound strategy, maximizing your budget means more traffic and more conversions. It’s the sweet spot that advertisers should be focused on when their campaign has been vetted and optimized for a period of time.

Continual monitoring of your campaign’s performance is essential because what matters most is that you are getting a meaningful return on your investment. Regularly reviewing campaign performance data will help reveal any potential weak spots or opportunities for improvement.

Even if your campaign is performing well, don’t be afraid to try new things or explore other opportunities. Most advertisers know that after an account has had several months of optimization, it requires far less work to maintain it then when it is launched. But industries evolve and trends can change, so keeping a close eye on all activity is necessary to stay ahead of the curve. Avoid any temptation to put a campaign in “set it and forget it” mode.

Your ad position can definitely mean a whole lot more than simply where you stand in relation to other competitors on a search engine results page. Staying focused on ad positions within your Google AdWords account will provide valuable insight to help you optimize the performance of your AdWords campaigns.