Tag Archives: Google AdWords

Google Using Organic Search to Determine Cost Per Click Values in AdWords

Jeremy Chatfield of Merjis has said it best in this post detailing why some keywords in AdWords accounts will never generate impressions. Additionally he predicted on 9-16-08 some of the impacts of the 9-15-08 AdWords quality score updates would actually mean for advertisers. His predictions have come true. Read this interesting article on how he feels that Google develops the cost per click for brand new accounts before the ads even start to run in this post from his blog from trends in organic search.

I have gone back to read this post several times over the last month and feel that Jeremy has nailed what happens in AdWords and that Google uses trends and histories accumulated from activity in organic search to determine the value of a click in their network. If you have ever wondered why great keywords in your accounts will not show impressions no matter what you do, you will find the answers in his post.

Jeremy Chatfield is a leader in the Google AdWords professional account manager community. We became friends in one of the Google AdWords support forums (even before social networking). I think that you will agree that several of his key points deserve particular merit and consideration.

1. …in addition the PageRank derived algorithms, some kind of AI that collects information about clusters of words and their proximity.

2. [In regards to cost per click]…The weaker the synonym, the higher the very first (Initial) MinCPC you are offered.

3.  …When I see “$0.22″ in a new account, I immediately assume that it is the Initial MinCPC, just after the AdGroup has been made, and that the keyword is a close synonym of advert copy. If I see a $0.50, I assume a weaker synonym.

4.  …[On the Google Slap] When this happens with rarer searches, and a business depends on that stream, it can look as though Google has made a decision to pull the plug on the business. Impressions on a carefully chosen set of keywords can die to nothing, overnight. Phone calls to Google will result in denials of any changes to the system. But still the business is in the pits.

Transparency has not been one of Google’s strong suits and with the Google announcement that they make between 10 to 50 quality score updates a month (see this past Wednesday’s post) it has to be assumed that this is really all about profit generation and not improving the consumer experience in reality.

Google’s motto used to be “Do No Harm”. I now recommend that the motto be changed to “Get What You Can, Fool!”

Unfortunately we in the professional and advertising community have helped Google to control us in this manner, we jumped when Google Analytics was offered! How do you think that Google has leared the value of a click and the value of click through rate on websites, but by taking the proprietary information, that we used to guard closely, that they now harvest from Google Analytics, as well as trends in Google.com search activity and history from iGoogle and personalized search results to create golden handcuffs for us and to bleed us for cash in AdWords.

What is particularly unfortunate in this whole scenario is that there is not really a strong viable platform alternative to Google AdWords. If there was, then Google would not be able to exert the control that it does on advertisers and their pocket books. If there was ever a case to prevent Google AdWords ads from showing on the Yahoo Search network, this is it!

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Google Quality Score = Yield Maximization or More $$ for Google

I watch a number of forums and I wanted to post an extremely insightful quote from Chris Zaharias of Omniture, Inc. posted on the Webmaster Forum (used with approval of Chris Zaharias). The comment is indicative of the grab for cash that Google is doing when it comes the quality score updates and the lack of transparency into the workings of AdWords keeping advertisers at an increasing disadvantage in regards to paying a “real” market value for clicks.

On Google’s earnings call this afternoon a Wall Street analyst asked what effects the company saw from the AdWords changes implemented early September (1st Page Bid, no more Inactive KWs, real-time Q.S. calculation), and Jonathan Rosenberg replied that Google makes 10-50 (yes, *50*) ‘quality improvements’ *each quarter*. Two things worth noting:
1) If they have been and continue to make 10-50 changes to AdWords every quarter – and that *was* the clear implication from Rosenberg’s statement – then no wonder Google never fully explains Quality Score. They *can’t*, because it’s a yield optimization set of calculations that change frequently, do not necessarily hold true to what Google tells the advertiser community, and aren’t, in fact, all about ad quality;

2) I’ve listened to virtually every Google earnings call, and each time an analyst has asked a question about monetization improvements, Google execs have responded by talking about Quality Score and ‘quality improvements’. That QS and monetization are synonymous inside Google, coupled with 10-50 ‘quality improvements’ per quarter, together means that Quality Score is not the Newtonian, relatively stable system Google tells advertisers and agencies it is, but much more like a quantum particle whose traits can only be understood in terms of probability.

Probability –> Otherwise said, Google’s system is a real-time yield management system working on Google’s behalf. While publisher & advertiser interests being met feeds into the system, ultimately the system’s goal is yield maximization, and to that goal static explanations (like the ones we in the SEM community are always trying to get out of Google) are like straight answers on quantum entanglement = either you won’t get a straight answer, or the truth will blow you away. . .

So What? –> This means that advertisers and agencies need to ‘instrument’ their SEM efforts with a yield optimization system – working to *their* ROI goals and optimizing to better [=ROI] data than even Google has – in order to continue to thrive. Thrive, first in the yield-drive, fuzzy, world of Google, and thrive second in the wider advertising world – radio, TV, print, banner, etc – that Google’s more efficient system is bound to grow into.

IMO, we in the SEM community need to stop trying to get a static definition of Quality Score, as it will never come for the reasons stated above. Instead, we need to build our own yield maximization systems so that we know at all points in time the nature of the buying intent in the traffic we buy, and optimize our traffic buy and our sites (our businesses, ultimately) to our own goals. Do that and you can give as well as you get from Google.

The bottom line consensus from the community of professional webmasters and AdWords account managers is that Quality Score is a tool that Google uses to their monetary benefit. As you read this, you may consider that I may be overly cynical, but here is a clear portrait in five AdWords accounts and just a sampling of the “grab for cash” that this past AdWords quality score has caused in mature, top performingm high CTR and strongly converting AdWords accounts:

Client One – spends $3,000 per month in AdWords, August average cost per click $1.21, October average cost per click $1.79, that is an increase of 48%.

Client Two – spends $3,000 per month in AdWords, August average cost per click $.66, October average cost per click $1.05, that is an increase of 59%.

Client Three – spends $3,800 per month in AdWords, August average cost per click $3.12, October average cost per click $3.38, that is an increase of 9%.

Client Four – spends $800 per month in AdWords, August average cost per click $7.03, October average cost per click $8.19, that is an increase of 17%.

Client Five – spends $800 per month in AdWords, August average cost per click $4.13, October average cost per click $5.97, that is an increase of 45%.

Although Google has clearly painted this updated, done on 9-15-08, as an improvement to provide better quality ads to viewers and therefore improving the quality of their advertising network benefiting advertisers, in reality, it is clear that this is not the real thrust of this update. Based on our sampling of clients above we have seen on average an increase of 35% in the cost per click since this update. Overall we have seen from a 5% to 200%+ increase in our accounts.

I have to directly challenge Google’s view point that this recent quality score update, which has wreaked havoc for advertisers far and wide, was about “quality”, clearly it is about increasing returns for Google!

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Are You Leaving Cash on the Table For Google AdWords to Take?

Are you leaving cash on the table?Are you spending more than you should on Google AdWords? You may be doing just that. Since September I have seen around a 20 to 30% increase in the cost per click on Google AdWords.

I have just finished doing 25 account optimizations for dentists and doctors for one of my clients. What I found was that by dropping the cost per click and moving the advertiser to an average setting of 4 to 7, we were able to nearly double the number of clicks and nearly triple the number of impressions.

Everyone wants more clicks, but are you willing to trade a bit of page placement to get them. Ego can force many advertisers to overpay Google AdWords in the effort to own the top spot on the results page. What I have found is that conversions are not typically ad position sensitive on AdWords. This is not the case on Yahoo where position does seem to impact conversions.

It is very important to note that on all of the optimizations we did for the doctors and dentists not every account reacted favorably to the changes, but over one half of the accounts and more likely closer to two thirds did experience improved results.

So don’t leave cash on the table for Google to take and pocket, make a careful and thoughtful review of your account and then review again periodically. Advertiser come and go on AdWords so the price that you pay is dynamic and will change over time and based on the season.

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