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Forecasting considerations and lost impressions due to rank

jmw
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# 1
jmw
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Good evening all,

A question on forecasting considerations when dealing with lost impressions due to rank. I recently ran into an issue during a forecast and I'm still a little unclear of the ramifications of my previous assumptions.

There were a few scenarios in the forecast, one under business as usual, another eliminating lost impressions due to budget, and a final one taking into consideration lost impressions due to rank.

The issue arose in the third scenario. In the second one, I assumed CTR and CVR and CPC would be similar because we're just turning up budgets to take advantage of missed opportunity. Those extra impressions were assumed to behave similarly to current base impressions.

I made this same assumption, that rank loss imps would perform similarly to current impressions, and that lead to some big mistakes. Can someone shed some light for me on this issue of rank loss imps and their performance relative to current observed impressions?

Thanks much, I appreciate the help.
2 Expert replyverified_user

Re: Forecasting considerations and lost impressions due to rank

Top Contributor
# 2
Top Contributor

Hello,

 

I think it's pretty cool the way you are forecasting, sort of for any scenario.

 

I think the third scenario is quite hard to forecast for though, because I don't really know how you can quantify it.

 

Going back to basis for a second; ad rank = quality score x max CPC. Obviously you can manipulate your ad rank to an extent through raising CPC, but ultimately a low QS will harm you and potentially render your keyword useless (not triggering for ads due to low QS).

 

If this happens, then, does it mean essentially your forecast Imp could go down to zero? Or would it half? I just don't know.

 

However, if you do somehow figure out how many impressions you are likely to get based on a certain ad rank then I'd consider the following relative to other areas of consideration:

 

  1.  CTR - likely to be lower if your ad rank is lower. I know there's a lot of debate over the fact that P.1 doesn't neccessarily mean a higher CTR than P.3 or 4 (top right corner), but if we're going on assumptions here then we will have to assume there is a sequential lowering in CTR by each position lost due to ad rank
  2. ConvR - I actually think this would remain the same as with your current observed performance. Just because your ads are lower I don't see why your ConvR should change if your product offering and site remain consistent
  3. CPC - although a lower position (assumed due to loss of ad rank), I'd guess that your CPC will go up due to the loss of QS in order to compensate to balance ad rank out

That probably doesn't help, but I hope it helps you to find clarity in some way.

 

Cheers

Jack Porter-Smith
Jack's G+

it does help a bit, if for anything, to think back to the...

jmw
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# 3
jmw
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it does help a bit, if for anything, to think back to the basics of the issue. thanks for your help!

Marked as Best Answer.
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Accepted by Mini-CM (Community Manager)
September 2015

Re: Forecasting considerations and lost impressions due to rank

Top Contributor
# 4
Top Contributor

Hi jmw,

 

I think your assumptions on the second scenario are correct; when tackling Lost IS due to budget, and increase in budget is unlikely to change the relationship between those core metrics.  However, when looking at Lost IS due to Rank, other factors come into play and there could be some startling differences.

 

For a start, it is well established that Ads appearing at the "Top" have a quite substantially higher CTR than Ads in any other position so any potential change in CTR is going to down to whether your increase in rank takes you over into "Top" territory or if you're already there.  The "Top vs Other" segment report will show you where your Ads are currently appearing (if you haven't already looked at this).

 

Conversion rate is a lot harder to answer and is a good topic for debate long into the night.  Personally, I often think that while the Top Ads get better CTR, that doesn't necessarily mean the clicks are "better" in terms of potential conversions.  In other words, is a click at the Top any more likely to convert than a click at, say, the #4 position?  I think it depends upon your business and the product/service you're marketing.  I've always believed that Top Ads are likely to get more "what's this?" type clicks where the searcher has no intention to buy at all whereas Ads clicked further down the right may indicate a more thoughtful approach to the search.  This is pure speculation, of course, but I believe it's worth thinking about.

 

It's perhaps most important when chasing that top spot means a substantially increased CPC.  If your profit margins are already tight, an increase in CPC and CTR without any commensurate increase in Conversions could mean making less net profit than if you'd stayed further down the pile.


Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits

Re: Forecasting considerations and lost impressions due to rank

jmw
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# 5
jmw
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Jon, 

 

Thanks for the response, and your logic makes sense to me. I did make assumptions to adjust CTR and CPC in my forecast when moving campaigns up in rank, but I'm still concerned that I'm missing something when it comes to lost due to rank impressions. Because (if lost due to rank = 50%) that means 50% of the time the ad isnt showing, how can i expect it to perform when it is showing 100% of the time.

 

Maybe I'm confusing myself at this point.

 

Thanks!


Cobnut wrote:

Hi jmw,

 

I think your assumptions on the second scenario are correct; when tackling Lost IS due to budget, and increase in budget is unlikely to change the relationship between those core metrics.  However, when looking at Lost IS due to Rank, other factors come into play and there could be some startling differences.

 

For a start, it is well established that Ads appearing at the "Top" have a quite substantially higher CTR than Ads in any other position so any potential change in CTR is going to down to whether your increase in rank takes you over into "Top" territory or if you're already there.  The "Top vs Other" segment report will show you where your Ads are currently appearing (if you haven't already looked at this).

 

Conversion rate is a lot harder to answer and is a good topic for debate long into the night.  Personally, I often think that while the Top Ads get better CTR, that doesn't necessarily mean the clicks are "better" in terms of potential conversions.  In other words, is a click at the Top any more likely to convert than a click at, say, the #4 position?  I think it depends upon your business and the product/service you're marketing.  I've always believed that Top Ads are likely to get more "what's this?" type clicks where the searcher has no intention to buy at all whereas Ads clicked further down the right may indicate a more thoughtful approach to the search.  This is pure speculation, of course, but I believe it's worth thinking about.

 

It's perhaps most important when chasing that top spot means a substantially increased CPC.  If your profit margins are already tight, an increase in CPC and CTR without any commensurate increase in Conversions could mean making less net profit than if you'd stayed further down the pile.


Jon