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Aug. 15, 2007 at 9:05am Eastern by Barry Schwartz
Reaction Towards Google's New AdWords Promotion Formula Change
A week ago today, I wrote about new changes coming to Google AdWords under the title of Want That Top Ad Position On Google? The Rules Are About To Change. As I explained, Google is changing some of the criteria on how an ad gets promoted from the normal sponsored results listed on the right side of the page to the sponsored listings listed at the top of the page, directly above the organic search results.
In short, Google will be using the maximum CPC figure, as opposed to the actual CPC figure, when determining the promotion of an ad to the top position. To be clear, Google will not be charging you the maximum CPC figure, they will still charge you the actual CPC figure.
I thought I collect and summarize the various opinions, commentary and concerns with this new algorithm, even before it has been pushed live.
The Positive Side:
Google explains this new formula will "offer advertisers more control over achieving top placement." How so? Well, they can increase their maximum bids, which can impact the overall promotion formula.
In addition, Google claims that this will produce better quality ads for their users. How so? Google explains, "This is due to more high quality ads becoming eligible for top placement, thereby allowing our system to choose from a larger pool of high quality ads to show our users."
The Negative Side:
This may have a direct impact on those advertisers who have already achieved those top ad positions. By allowing others to more easily achieve those listings, it will make their ads more costly and competitive in nature.
More costly? Yes, that is the main concern. Advertisers are worried that their competitors will continue to increase their maximum CPC in order to obtain those top positions. If everyone increases their maximum CPC, keywords will get more expensive, and advertiser's ROI will drop.
Notable Blog Posts:
Here are some of the blog posts discussing this new promotion formula. If I missed any, feel free to add via the comments below.
- New Google Adwords Formula = Just Pay Us More via Graywolf
- The Economic Motive Behind Google's New Advertisement Algorithm via SEOmoz
- Bruce Clay's Pay Per Click Expert Discusses Google's AdWord Tweak via BruceClay.com
- Forum Members React to Google AdWords "Promotion Algorithm via Search Engine Roundtable
- Google Turn Up The Revenue Dial - Adwords Top Ad Placement Formula Change via UK PPC Blog
- Google Turn Up The Revenue Dial... via Internet Financial News
- Changes in Top ad placement formula for adwords via Rajwansh
- Google Just Keeps Getting Richer — New Change to AdWords Announced via MarketingPilgrim
- Google Makes Changes to Ads Quality Calculation via Search Engine Watch
- The Google Honeymoon Is More Than Over via Smart Keywords
- More Links via Inside AdWords Blog
- More Coverage via Google Blog Search
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By Barry Schwartz
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Reader Comments
I have to disagree with JEHochman. Google has and always will be the major contributor to all of my clients' ROI. In fact, I wouldn't overlook Yahoo in the equation, because more often than not, Yahoo brings in more ROI than adCenter ever could.
If you're looking at some of my compiled traffic stats, Google is king (by far), Yahoo comes in a very distant second, and adCenter is all but irrelevant.
Garry
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Transparency at Google AdWords continues to dwindle. I also like the way they eliminated hourly stats from Google Analytics so it's no longer useful for figuring out what day parts are less profitable. To me, it seems that Google is using market power to increase profits. This is a mistake because Microsoft is coming on strong, and once Google starts to slip, Microsoft may roll them.
I keep weekly stats for my clients across search engines, and I see Microsoft gaining share. I see higher ROI with Microsoft than Google. Changes like this one by Google are a bad idea.
For the record I don't like Microsoft software, but that won't prevent me from advertising with them if their network is cost effective.