When and How to use Position Preference for Keywords in Adwords

Adwords allows you to set Position Preference for Keywords on search. To enable it,

1. Go to Edit campaign setting and check the box for Position Preference.
2. select the keywords where you want to apply the preference and click edit keyword setting.
3. Choose the preference of position against each of the selected keywords.

Position preference is to tell the system what is your most preferred position where you want
the clicks to come from. Situations where you should use it are:

• You have discovered some patterns through observation and arrived at the conclusion you convert more often at some places.
• You find it is useful to show in top 3 and useless to show below them. It is true for some kind of Search queries, Conversions are absorbed by top 3 solts, you shouldn't waste click showing below.
• You find a lot of junk clicks at the top and so want to show at the bottom instead. There are situations at certain times that top 3 and higher up the rank attracts too many junk clicks which makes your ROI negative. You may do the turnaround by locking position 6-8. clicks get reduced because of minimization of impulsive clicks and people who click are those who have found some attraction in the ad after reading it.
• You consider Slot no 3-4 to be golden. This is the slot which never shows up in the colored bar. all clicks are through people who have well read the ad copy. it has very good balance of visibility and priority.
• You want minimize the clicks to the maximum w/o losing visibility on the first page. Such a situation happens because of off season impact on your business. Opt for 5-6 slot. it is considered the dead zone. People seldom notice them. Those who notice are who discover something great or irresistible in your ad.

What position preference does for you:

• It will show your ad only in the preferred position.
• It won't show your ad out of the preferred slot even if you qualify for higher position. If you choose 5-8 as preference and ad rank qualifies for slot 1, even then you would be showing at no.5. you would also be charged accordingly. However, there are exceptions observed with respect to the upper limit and Google may show your ad Higher up the Preferred Position.
• Your ad won't show if otherwise it does not qualify for the chosen slot. say you have preference for slot 1-3, but your ad rank qualifies for slot 5. In this case your ad won't show at all.

Update: There are many people who complains, failure to see the ad in preferred position. The most likely hypothesis that may be true is Google gives the preferred position to the ad with highest quality score, if there are too many targeting the same slot. Others being forced to show higher outside the preferred position, if their ad rank permits.

Also Read:

1) NetArgument - Online Skills!: Position Preference Failures: When and why it Happens?
2) Position Preference on Google Search - Why, When and How to use it.