I read that the actual positioning is a combination of a bid price and CTR. The question is, if Google is not preferring the higher bidder in order to increase their profits. In other words, what is Google's business incentive to position higher CTR ads higher than a higher bidder? Thanks, Amit
in one word...RELEVANCE. google wants money no doubt, but there company is worthless if they don't give the customer what they want.
How do you know if they keep their promise? The higher bidder is relevant as well yet he is much more profitable for Google...
Actually is not only CTR: Position = Bid x Quality Score Quality Score has other factors inside it, not only CTR: But lets ignore the other factors and assume: Position = Bid x CTR for while to answer your question: Google don't earn money per impression, they earn per click. If no one click on ads, they will not earn money not matter how high are you biding - this is why they incentive High CTR - this is why if you Bid $5.00 this is not a guarantee your ad will not be above someone that are biding lower compared to you - because what matters is the combination bid x CTR. and this is wonderful: this gives you a chance of get a good position paying less if you write a better ads compared to your competitors: you will pay less and consequently has less costs on marketing.