I'm often asked by clients why our AdWords ads aren't showing up at the very top. My answer is: Sometimes it's far more profitable to show up further down the page.
Let's say you have a product / service with a long sales cycle. It's heavily researched by your customers.
They compile lists of every option that appeals to them, starting really broad and narrowing as they go.
Imagine your customer is in the market for a new home, for example.
She's seen thousands of homes from various builders in the area. She's started to build up a preliminary list the neighborhoods where the homes that she likes are located. She may even have an idea of where she wants to live.
She starts Googling "home builders in Cincinnati."
As the advertiser, you have a decision to make. Do you bid for the top spot for this term and others like it? Or do you bid for a lower spot to get a significantly lower cost per click?
By the time your customer makes her decision, she will have researched most of the home builders in the city, including yours.
Your only goal should be to get found. Not to get found first. As long as she finds you, you'll make the consideration list (assuming you do a good job of convincing her after the click).
A lower cost per click will allow you to get on a whole lot more consideration lists, making it more likely you get picked.
This strategy applies to a lot of verticals where the sales cycle is long and the customer is doing a lot of research. New homes, cars, private drug treatment facilities, etc.
This also works for lower cost verticals where you see heavy price shopping. In those cases you might want to be in the top 5 or 6, because the customer won't spend much more time searching than that, but you still don't have to be #1.
Don't try to be first, just try to make the consideration list.
Of course, if search volume is low you've got a different problem.
