I'm going to tell you a story. A story about a metric in AdWords that people trusted.
People grew to love this metric, they told their bosses how it was doing, they made changes to their campaigns based on it, and they judged their performance on whether it went up or down.
But those people didn't see below the surface. Lurking under the superficially obvious meaning of the metric was a hidden dark truth: the metric wasn't just pointless, it was lying to them.
That metric is Average Position, and I'm sure quite a few of you are guilty (if unintentionally) of taking it at face value.
The first thing to know about Average Position is that it's strongly affected by your impression share. If your impression share for a keyword is near 100% then that's great. But if it's at all off that figure then your position metric will be skewing up.
Remember that you can't see impression share per keyword...
Your ad enters the auction on every search for which your keyword is eligible (barring budget restrictions), but some of the time it doesn't reach the first page.
In those cases you have been rotated off in favour of other advertisers. Your ad's position is still calculated, but if you aren't on the first page you don't get an impression. No impression means no impact on average position.
That's a problem. If you spend 10% of the time in position three and 90% of the time in position 23, your average position will be three. It's misleading to you as a campaign manager about how your keyword performs.
So unless your impression share is 100% your average position is showing a higher value than your true average.
The next important point about average position is that it's a mean average. That means it's the simple kind of average you learn about at school: the total sum of positions divided by the number of impressions.
Unfortunately it's not very informative.
If you spent every search in position three then your average position will be three. Which is great. But if you spent half the time in position one and half the time in position five, you average position will still be three. Suddenly your average is telling you a position you were never really in.
You may have spent 20% of the time in each of the top five positions. You'll still have an average position of three, but it's incredibly misleading about what's really happening.
A mean average without a standard deviation tells you almost nothing about what your ad is really doing. AdWords won't give you that data (GA will give it to you for your clicks, but not your impressions.
Since you can expect a higher clickthrough rate (CTR) in a higher position, this figure will skew upwards too).
In the chart below, the vertical scale represents impressions per actual position on the page. All three of these distributions will give you an average position of four.
Any frequency distribution (e.g. a chart of the number of times you appeared in certain positions) will either be symmetrical around the mean average, or asymmetrical.
This means that it could be showing a lot of times in position two, then a few times each in all the lower positions. The average might be three, but enough impressions in positions higher or lower could mean that your ad's distribution looks more like a long tail than a normal distribution.
Again, you're going to get no data about this, so you still don't really know what positions your ads were appearing in.
In the image below the average position is 4.4, although positions two and three have by far the highest occurrence of impressions.
Top vs other
Now we get down to what's important: it's crucial that you appear in the top three positions, the banner positions. You can expect your CTR to be 10x to 15x higher in these positions than on the right hand side. That's a 1,400% increase!
If your average position tells you that you are in position 2.5 and you take it at face value, you might believe that you are in the banner most of the time.
But as we've seen, this doesn't really tell you much. We already know that the average position is skewing up if we don't have 100% impression share, and we have no idea what our spread of impressions really looked like.
The top vs other segment comes to the rescue. Top vs other is almost the metric that Average Position is a proxy for.
The top vs other segment can be applied at any level in your campaign, and lets you see the proportion of time you spent in the banner vs the right hand side. This is absolute gold for knowing how your keywords are doing.
If your ads for a specific keyword appear in the banner only 40% of the time, you know that 60% of your impressions could have happened with that higher CTR, if only you'd increased the bid.
So from now on, you're bidding for top vs other proportion, not average position.