It isn't just a bid war:
The two major pay-per-click ad systems, Google and Yahoo, both employ ad quality monitoring to influence the position of ads among the sponsored search results. Just setting a high bid won't assure top placement in sponsored results. Writing real estate PPC ads that draw clicks will get you a discount.
The ranking of the paid ads is determined by complicated and secret mechanisms, but it is stated by both providers that the click-through ratio (CTR) of an ad will influence position.
Write an ad that catches the eyes of the searcher based on their terms:
The first and most important step is to write an ad that fits the search term used. Use the words in the search term in the headline and/or body of the ad. This is a practice recommended by Google and Yahoo and it is known to be effective. If you're writing an ad for the search term "YourTown real estate", have those words in the headline or text of the ad, or both. That's what brought them to the search results page, so naturally their eyes will be drawn to an ad that seems to address that term specifically.
Test multiple ads until you find the right one:
Write multiple ads for a campaign and watch their click-through ratios (CTR) to see which ad is getting the highest percentage of clicks through to your site based on the number of impressions. Once one ad stands out as a performer, you can close out the others if you desire. Google also allows you to tell it to show the best-performing ad more than others.
This isn't speculation - you'll really save money:
One manager of pay per click advertising accounts for real estate web sites has shown repeatedly that money is saved and position is improved over time with well-crafted ads. One specific comparison of two competitive accounts with the same keywords in the same town shows that the ads running the longest and with a higher CTR percentage gained the advertiser an average position between second and third with an average cost per click of $0.69. The other newer account with a lower CTR got roughly the same positioning but spent an average of $2.05 per click!
The exposure difference can be significant with the same budget:
Using the example from above, a $10.00 per day ad budget would generate a possible 14 clicks at $0.69 and around 5 clicks at $2.05. Over the course of a month, that's 270+ more clicks at the lower price per click and that's a possible 3000+ more clicks in the year!
