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
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.
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.
Nadir can be contacted at nadir.hussain@MediaFlint.com