A Higher Click Through Rate CTR% will make Google or Yahoo more money in the long run.

I’ve taken a screenshot from a video at StomperNet.net.

This is a great example of what a higher CTR will do.

1. Higher CTR Results in Higher Click Throughs with same amount of Impressions.
2. Higher CTR Results in Higher Ad Positions.
3. Higher CTR Results in Cheaper Cost Per Click.

WHY IS THIS ???? confusing???

For example… Let’s IMAGINE…

GOOGLE only has 5,000 Impressions to sell to it’s advertisers from their website.

Their are 2 ways, Google can make money, but they only charge you PER CLICK. More clicks for them = More Money.

option 1) highest bidder WINS (old google) - ad gets placed on top depending on your bid.

option 2) highest ctr WINS (new/PRESENT google) - ad gets placed on top depending on CTR rate, cost is also affected.

in EXAMPLE

option 1 ex) 2796 imp @ 2.61% CTR = 73 CLICKS * $1 CPC = $73

option 2 ex) 2796 imp @ 6.49% CTR = 181 CLICKS * $0.65 CPC = $117.65
with the same amount of impressions, google made more money on the higher CTR % even though the CPC was lower.
so in result, this makes option 1 less profitable for google.

in RESULT (GOOGLE WANTS MORE MONEY!!!!)

option 1 result) the guy w/ 2.61% CTR and $1 CPC would WIN, but google loses

option 2 result) the guy w/ 6.49% CTR would make GOOGLE more MONEY, google wins mainly, but everything is more EQUAL.

in CONCLUSION

google, will choose the method; that makes their company the most dollars. which is OBVIOUSLY OPTION 2.

Glossary Definitions:

Impressions (Are the people who SEE your ad, Not Click on your ad)
Click (The people who saw your ad, An CLICKED on your ad)
(CTR%) Click Through Rate (The % of Visitors, who Click Through Your Ad)