Dear Friend,
This past month Google AdWords has rolled out some significant changes that have impacted many accounts with an increased cost per click. If you are a Google AdWords advertiser you will want to review the trends that we are just starting to see occur in the wide variety and number of accounts that we manage as detailed in our feature article for this issue.
Best Regards,
Nancy McCord
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Google AdWords Changes Cause Sweeping Impact in Cost Per Clicks
In the second week of September, Google AdWords rolled out some big changes. Some of the impacts of these changes are just now beginning to be felt by many advertiser accounts.
First, what Google did was to do just a few important tweaks to their highly profitable ad delivery system called AdWords. Here the changes are in a nutshell.
- Keywords are no longer marked "inactive
for search" - Google now allows
all words to be shown in
the search index and will deliver
clicks based on quality score,
bid price, and daily budget.
- Quality
Score is now more accurate
- Google
has stated that they will
evaluate the quality score
as the search query is
entered.
- "First page bid estimates" replace "minimum bids" - Google also said that they would start showing information to help advertisers know how much to bid for certain hot property keywords to appear on the first page of the search results.
What has happened in accounts, as of this change, has been broad and sweeping. The change has particularly affected advertisers in major market such as Los Angeles, Washington DC, New York City, and San Francisco, just to name a few. The change has been pretty striking in regards to increasing the cost per click, as much as a 35% and sometimes even more to have specific hot property word appear on the first page of Google search results. This impact has been felt particularly on "Poor" quality score rated keywords, but even keywords with an "Ok" rating have been impacted too.
What I have seen just a few days after the AdWords rollout
was a striking drop in average ad position across the board
on many accounts in many diverse business sectors in major
metropolitan markets. Typically we like our client's average
ad position to be from 2 to about 6; depending on the client's
daily budget, the importance of the keyword, and the price
to be competitive with the market competition. We saw many
accounts which had been operating at this level suddenly
have an average ad position drop to an average position
of six to nine or lower. We have needed to adjust the maximum
cost per click in many of these accounts; fattening Google's
pocketbook and stretching the client's budget to the limit.
Many smaller markets such as Cincinnati, Ohio; Louisville, Kentucky, and other similar markets have not really been impacted by this recent change. However, the major metropolitan areas have been hit hard. What I found even shocking, as a professional account manager, was some of the notes on what Google recommended that the advertiser pay to appear on the first page of Google search results. Just one example is for family dental care (for the Washington DC metro area) the bid was $57! I do want to make sure to caution clients, who self manage their Google AdWords accounts, to be careful on upping the ante to these recommended figures. Remember, Google is in this to make a profit, this tactic may be considered "up-selling." This is also a good time to evaluate the quality score of a keyword and to pause or delete those keywords that may be sapping your program's health.
What I found interesting was that for many of the keywords where Google suggested a huge increase such as $15 to $26 PER CLICK to be on the first page of search results, the monthly figures showed that the keyword already had an average position of 2 or so at a figure of around $6.50 per click and in some cases have a quality score of "Ok" and a decent click through rate. In one specific case, the maximum cost per click was set at $12.00 but the actual cost that Google billed was $2.02. Remember, the client whose ad appears in the number one position is definitely being charged $12.00 per click by Google as they are the price leader.
Here are my recommendations from about two weeks worth of careful review of many Google AdWords accounts.
- If your budget is under
$500 for clicks per 30 day
period translating into an
figure under $16.67 per day,
you really must consider
increasing your click spend
in order to get in the game.
If you really cannot increase
your spending level then
you should only run one or
two ad groups in your account.
You can identify if you have
fallen out of the competitor
mix by reviewing your ad
spend. If Google has not
been able to spend your monthly
budget for clicks, then your
cost per click setting is
too low and you will not
garner the impressions needed
to make your AdWords advertising
program successful.
If you are in one of the
major metropolitan markets,
you must decide which keywords
you want to actively compete
on and increase your cost
per click to stay in your
desired average position.
This typically means that
instead of one default cost
per click, you will need
to consider a tiered cost
per click set up; identifying
top tier keywords that you
will bid a specific higher
figure for, another tier
in the middle, and the rest
of the keywords to be assigned
the default cost per click.
This simply means that it
will take more time to make
changes to your account and
to monitor your cost per
click figures.- You absolutely must review
your landing pages and make
sure that your message is
targeted to match your keyword
list and ad text. Although
Google has stated, "We will
also consider your landing
page quality. Although
your overall Quality
Score is evaluated at
the time of each query, landing
page quality is evaluated
less frequently."
- Don't be afraid and stop using AdWords. Remember, AdWords is an auction. That means that what your maximum cost per click bid determines your ad position and the frequency that your ad shows (in conjunction with your daily budget setting). This is a good time to review your ad text, revise your keyword list, tweak your landing page, and raise your bid, but enable position preference to ask Google to show your ads in position 2 to 10+. You definitely do not want to be sitting in the number one spot at this point in the game. Additionally, being number one in ad position does not mean that you will win more conversions, it simply means that you will be the leader for the cost per click and all advertisers will pay less than you will for a click on your selected keyword.
There certainly are other changes and impacts that we may see down the pike with this very important change and it simply may be too soon to know all of them, especially the notice about the less frequent spidering of landing pages meaning that the quality score is built mainly on your ad text and keyword list.
If you are currently paying $800 or more a month for clicks or $26.67 per day on Google AdWords and still self managing your account, now is the time to consider hiring a professional account manager. We are available, but even if you don't work with us, we would strongly recommend that you consider finding an account manager who you can trust to help you as Google becomes more complicated and the cost per click figures increase.
AdWords is still an excellent tool and a great value for the money that you invest. Using the power of Google you can reach new markets, expand your current market efficiently, and gain new business. We advertise our own services on Google AdWords too!
