In this article we showed that every advertiser has a position for their ad that is optimal for them, i.e. one that maximizes their profits.  This position need not be the top position.  In fact, only one advertiser will have the number 1 position as the optimal position for themselves.  In general, a scheme with eight ad positions will mean that for a certain advertiser, the number 8 position is the optimal position for themsevles, i.e. their profits are maximized in this number 8 position. 

In a world without quality score, this optimal position is determined solely by expected profits.  The higher the expected profits per click, the higher the optimal position for the ad.  This was seen to hold true regardless of the quality of the ad copy of the different advertisers as long as the higher quality ad resulted in the same percentage increase of clicks across the different ad positions. 

Finally, we saw that with quality scores, optimal ad positions are determined both by expected profits per click and quality score compared across competitors.  In all cases, however, it is of paramount importance to note that for every advertiser there is a optimal position for his/her ad which maximizes their profits. Thus, advertisers should not focus too much on trying to get into the top ad spots without proper data backing these goals. 

 
11. Bibliography 

 
12. About the Author 

Nadir Hussain is an experienced entrepreneur who has just launched his third startup. He also has experience working in larger corporations. He has been a Director in eBay's Technology group, a Senior Consultant at Deloitte & Touche, and a Software Engineering Manager at IA Corporation. Overall, Nadir has over 15 years of work experience that includes product management, business development, software development and more recently in Search Engine Marketing. His education comprises of an MBA from UC/Berkeley and a MSEE from Stanford University.