Lets take an example say you are bidding on widgets and the costs for positions netts out as follows
- Position 1: £2
- Position 2: £1
- Position 3: 50p
- Position 4: 25p
- Position 5: 10p
After looking at past keyword performance you will find that CPA goes down with position. So you can secure business for widgets but to get one sale in Position costs you £20, position £10 etc.
It is econmicially viable to get bsuiness at £10 so you set the positional target on the keyword widgets at position 2.
Crudely the system then tweaks your bid to be in that position, you can of course do this manually but doing it for 500,000 terms is not practical and ultimatley hits your bottom line in management fees.
Here is a client we started with in August:-
Took some time to get going and oddly found with this client their conversion rates were actually higher in positions 3/4 as opposed to 1 and 2. Combine this with a lower CPC and adwords is now very lucrative!