You know the saying about real estate right? It’s all about location, location, location. Today we thought we would cover some discussion about your ad location when you are using Google Adwords or any pay per click advertising. After all you are paying to play the game so you should spend some time looking at where you money is going.

I thought today I would uncover the myth that it is not always about being number one. Most of us are competitive by our very nature and we strive to be number one. Especially in real estate where awards are given for being the “Top Producer” we strive to be number one in the office, region, or even the MLS. But with Google Adwords and placing your ads carefully it isn’t always about being number one. Remember the goal when you use pay per click advertising should be this:

“Acquire the greatest amount of leads possible for the fewest dollars spent”

James and I are constantly looking at how we can lower the cost of our leads in both organic and paid ads. In fact in 2007 we lowered our spending on the Internet by 10% and increased the leads we received by 3%!

So what location is the best location to have? Well let’s look at a sample Google result page and see why maybe we wouldn’t want to be first.

The graphic image is from advertisers who advertise on the search term “santa monica homes”. Santa Monica is a city within Los Angeles County and is located with prime ocean views and expensive real estate. So can anyone see a problem with being number 1 for a search phrase like “Santa Monica Homes”? From our tests being number one on a search phrase like “Santa Monica Homes”(full disclosure we do not advertise on this term but have advertised on similar phrases) has had the following issues:

1. The current cost of being number 1 - many different advertisers may want to advertise on a phrase like this because it is not difficult to come up with. A person typing this search phrase may not be looking for a home to purchase but maybe to rent, maybe home improvement, maybe a friends house. The phrase is too broad to know for a fact.
2. The cost to stay number 1 - Let’s face it when you are number one people want your spot and they are willing to pay to get above you. This does nothing more than increase your cost.
3. The clicks don’t generate quality visitors - being number 1 generally means you are going to get the most clicks but we aren’t in the click business we want the clicks that turn into leads and spot number 1 can often be impulse visitors not the serious ones.
4. It goes through your budget faster - since we don’t have unlimited budgets being number 1 and paying the most often results in a daily or monthly budget not going as far as it would if you were at spot 3 or 4.

The old adage of location, location, location applies to the placement of your Google Adwords ads. It doesn’t mean you have to be number 1. In fact our results have shown that we increase our leads by 23.5% and our cost is lower by 12.5% by being at spots 3 or 4 so make sure you track your results and in the case of pay per click advertising it doesn’t always pay to be number 1!