• by Laurie Sullivan  @lauriesullivan, August 19, 2009

For marketers wondering how conversion rates change depending on where ads appear on Web pages, Google Chief Economist Hal Varian appears to have an answer.

Varian calls the problem "tricky," because Google ranks ads by bid times and ad quality, so ads in higher positions tend to have higher quality. These higher-quality ads tend to have higher conversion rates. He writes in a post on the AdWords blog that this means marketers may see a correlation between auction position and conversion rates.

Another fact that influences conversions: marketers increasing bids might see their average position move lower on the page. That's because when bids increase, ads appear in new auctions, and tend to work their way up from the bottom. This can push down the campaign's overall position, he writes.

"We have used a statistical model to account for these effects and found that -- on average, there is very little variation in conversion rates by position for the same ad," Varian writes. "For example, for pages where 11 ads are shown the conversion rate varies by less than 5% across positions."

An ad that had a 1.0% conversion rate in the best position would have about a 0.95% conversion rate in the worst position, on average, Varian writes. He explains that ads above search results convert within ±2% of right-hand side positions.

Didit VP Mark Simon says the New York company sees similar conversion rates occurring with its clients. "Not all traffic is converting traffic," he says. "The trick is to offer the creative and post-click experience that draws in the right searchers and drives them to convert, while also targeting the right market segment to convert on a given term."