Any less than 65%, then increasing your CPC bids would increase your profits. The point of profit maximisation is therefore where Impression Share is at 65%. anywhere to the right of the blue dot), you are making a marginal loss, so reducing your CPC bids and reducing your Impression Share would increase your overall profits. When costs for extra clicks is higher than the revenue those extra clicks generate (i.e.
anywhere to the left of 65% Impression Share), increasing your CPCs to increase your Impression Share would be a wide move, as it would increase overall profit. When the revenue for an extra click is greater than your costs for that extra click (i.e. The point of profit maximisation is therefore where your marginal cost are equal to your marginal revenue (highlighted by the blue dot). For each click where your costs are higher than your revenue, you are making a marginal loss. If you want more volume, each extra click is likely to deliver you less revenue.įor each click where your marginal revenue is higher than your marginal cost, you are making extra profit. Since increasing your impression share will arguably result in needing to show higher for your more generic, broader, and less profitable keywords, the downward-sloping marginal revenue line makes sense. The red line shows how revenue per click (RPC) would fall for each extra click as Impression Share is increased. The more you want to increase your Impression Share, the higher each potential click will cost, hence the upward-sloping line. Since you would arguably need to bid higher CPCs to get more impressions, and show on broader, more generic and competitive keywords, this makes sense. The green line shows how the cost per click (CPC) price for each extra click would increase as Impression Share increases. Since we are talking about marginal costs and marginal revenue, it illustrates how costs and revenues would change as impression volume (and therefore click volume) changes. Using CPCs to Increase Impression ShareĬonsider the diagram below, which shows a relationship between marginal cost per click, marginal revenue per click, and Impression Share. To see why, let's look at our two metrics which can influence Lost IS (rank) in more detail - CPCs and Quality Scores. Increasing your CPC bids or making changes to improve your Quality Scores might help to increase your ad rank and increase your Impression Share, but this may be at the expense of your campaign's performance and profitability. This means that if your campaign is profitable, and you would like some extra visitors, then making changes to reduce your Lost IS (rank) and therefore increase your Impression Share to get extra visitors might sound like a good idea.Īll other things are not necessarily equal. Similarly, all other things equal, increasing your Quality Scores would also increase your ad rank, which would also reduce your Lost IS (rank). All other things equal, increasing your CPC bids would increase your ad rank, and therefore reduce your Lost IS (rank). Lost IS (rank) is made up of a combination of your CPC bid x Quality Score. It's the other part of lost impression share - Lost IS (rank) - which we're more interested in here. Similarly, reducing your CPC bids will generally result in more clicks for no extra spend. Simply increase your daily budget, and you will generally achieve more clicks for a similar average CPC. Now if you are losing Impression Share due to budget, it's a no brainer. Lost IS (budget) - the percentage of impressions you missed out on due to budget restrictions, Lost IS (rank) - the percentage of impressions you missed out on due to low Ad Rank. To consider why, let's look at two metrics in Google AdWords which describe how often your ads failed to show. Does it really matter? Should you worry about a low Impression Share, or make changes to improve your Impression Share? Impression Share (IS) is a metric displayed in Google AdWords to describe how often your ads were shown for available searches.
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