Here's my dilemma ... Ad #1 has a CTR of 4.68% Ad #2 has a CTR of 3.88% Ad #1 has a conversion rate of 1.7% Ad #2 has a conversion rate of 2.0% Ignoring the CTR/CPC relationship, obviously I want to continue running Ad #2 because it would yield a higher ROI. But just how much does CTR affect CPC anyway? I'm just delving into this stuff, but it definitely doesn't seem to be linear because in this example my CPC is exactly the same with both ads. Perhaps a higher CTR will give you a lower CPC up till a certain point, but then it doesn't matter? In this case are my CTRs so relatively high that I'm no longer getting any CPC benefit, regardless if my CTR is 3.88% or 4.68%?
There's one pretty easy way to find this out: running an Ad Performance report. It allows you to get all the performance data for each separate ad (Conversion date, avg position, clicks, avg CPC, etc.). You can find it on the 'Reports' tab by selecting the 'Ad Performance' report type
You'd think so, but that's not entirely true... Suppose, for the sake of example, that in your case, your actual cost per click was £0.20. Your objective is to make as much profit as possible (not the most profit per click as possible). So, from 10,000 impressions, your first advert generates 468 clicks and 7.96 conversions, at a cost of £93.60. Your second advert generates 388 clicks and 7.76 conversions, at a cost of £77.60. The question is - are those additional 0.2 conversions worth the additional £16? If a conversion is worth more than £80 to you, then the first advert is more profitable than the second one. In answer to your question, the CTR only affects the CPC in that it's a factor in your Ranking Quality Score, which helps to determine your position (and the higher you appear, the higher your CTR will be). But Ranking Quality Score is calculated by keyword, not by advert, so the adverts will be treated the same (as they need to, if you want a reliable test of which is better).