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People are drawn to you when you're relevant. The formula for success on Google is relevance. When you're relevant, people will click on your ads, Google will explicitly reward you for it, your costs will drop, and your profits will grow. When you're the person laying out the cash yourself and it's your own business, your own risk, and your own credit card that Google is dinging every month, you don't have time for your own ego stroking. Your customers don't have the patience for it either. Nowhere is this more clear than in Google AdWords management. Putting your own money on the line has a funny way of wising us up to what gets clicks and what doesn't. Google Rewards You For Relevance Traditionally, you get higher positions on the search page by bidding more. But when your clickthrough rate goes up, Google actually gives you better positioning without charging you more per click. It rewards you for being relevant. Basically, the number one position always goes to the top bidder. However Google has a long standing tricky little twist. This is the boiled down view of the formula: Your Relative Position = Your Bid Price x Your Clickthrough Rate The fuller version of Google's formula is your bid price multiplied by your Quality Score. Either way, your CTR swings the biggest difference apart from the price you bid. Which CTR, exactly? The CTR of your individual keywords as they perform on Google alone, not the total CTR of your ad groups, not the CTR of any of your ads, and not the CTR of your ads as they're performing on Google's search partner sites or AdSense. With your good click through rate, you don't have to bid as much for a good position. IE: If I put a bid of 1 dollar and I am getting a 1 percent click-through-rate and your ad get 2 percent click-through-rate, then you will be able to get the same position as I have for a mere fifty cent bid, and if you bid only one cent more than that 50 cents you would get a better position. To top that, if you already own the top position, as your click-through-rate increases Google automatically lowers your bid price. Way to go! Even though this may seem magical, it isn't. It does mean you are shelling out less money each month to Google and that means more money heading to your bank account.
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