Google and the Tour de France

So much has been said about Google, that it hardly needs me to add my tuppence-ha’penny worth. But ask any expert in SEO and he/she will tell you that the optimum position in the sponsored link section is about 3^rd. Why? Because the click through rates rapidly tail off below the top three.

If you’ve got an unlimited budget, then fine. But it includes large volumes of people who are less than serious about your product or service. So that’s a waste. Also a number of companies can be bidding against each other to get into that zone – a bit like a breakaway group of cyclists sprinting away from the pack in the Tour de France. Far cheaper clicks can often be found at levels in the “peloton” - the pack of following cyclists - just below the breakaway group.

I’ll give you an example. Let’s suppose five companies are all bidding between £1.50 and £2 to get into the top three. That means the companies in 4^th and 5^th place are likely to raise their £1.50 bids to £2.10 in an effort to get higher. Then those at £2 feel miffed that they are being left behind and raise theirs to £2.20 and so it goes on until someone realises they’ve got no budget left. Interestingly the tools that Google now gives you to “optimise” your budget only encourage this behaviour by making you believe it is better to pay a higher CPC for short periods of time.

Why do people behave like this? The answer is here in a Boston Globe article about the Tour de France: “I asked Brown why small groups of riders "attack," or break away from the pack. "Because it's a race," he answered. Duh.”

But it’s not a race to waste money. The pack, who are quite happy getting lower click-through rates, sit at somewhere between 20p and £1. Their bids aren’t going to get any higher. In fact their mentality should be the opposite. How far can I LOWER my bid before I fall off the bottom of this ladder?

The economics of this are actually quite simple. A CPC of 50p will drive 5 times more traffic than a CPC of £2.50. If users have the patience to trawl through 10 different websites before making their buying decision, then 10^th is the best place to be, not wearing yourself out with the breakaway, and slipstreaming the rest of the pack. The only proviso is that the quality doesn’t go down. But in my experience, the user who clicks on 10 different ads is a far more serious buyer than the one who clicks on two or three.

Higher volumes of more serious buyers at lower cost per lead… Where’s that yellow jersey?