Penny for Your Clicks? The Google AdWords Change
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Written By Reprise Media | July 18, 2005 | Share This
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Late last week Google introduced a “quality based” bidding system intended to give advertisers more control of their campaigns while potentially improving ad relevance for users.
This newest AdWords incarnation will no longer automatically disable words that generate a high number of impressions without achieving a corresponding minimum number of clicks.
Instead, Google will make these ads available to users, provided the advertiser meets bid requirements established by the system. By doing so, Google will open up a larger inventory of ads in addition to reviving ads formerly in the dark.
AdWords customers will notice the ‘Smart Keyword Evaluator’ that uses past campaign experience to predict a keyword’s success (as measured by CTR) going by the wayside, along with designations of “on hold” and “in trial”. From now on, a keyword is simply “active” or “inactive.”
Although the old system will be discontinued, Google will continue to hold advertisers (and their keywords) to certain minimum standards of performance. The predictive CTR-based system will be replaced with a new heuristic called “Quality Score”. This number is derived from an advertiser’s CTR, their historical performance, and the quality of their ad text.
What’s our take on this new system? A few quick points:
- Pay to Play? Yes: The change represents a fundamental shift away from the clickthrough rate as a measure of an ad’s relevance. Instead, advertisers are given a fairly straightforward, quantifiable choice when their listings become disabled - either improve ad relevance or raise the price they’re willing to pay.
- Flexibility & Freedom? Yes: This new system will undoubtedly give advertisers more flexibility in Google’s marketplace, allowing them more leeway to test keywords and creative for clients. While these tests may cost advertisers a premium in the short term, they will pay off in learnings critical to long-term strategy.
- A Costly Change? Not Necessarily: This system won’t have the automatic effect of raising bids for marketers as many might assume. Certain advertisers with superior performance and relevancy may actually see their bid prices reduced. To this end, Google has lowered their minimum bid from $0.05 to $0.01. Smart marketers will look at this as an opportunity to reduce costs while improving performance.
- More Headaches? Maybe: This change adds yet another nuance to an already fractured marketplace. First-time marketers may be a little intimidated by this latest addition to Google’s laundry list of rules they need to follow.
Topics: Google: AdWords |