Click Tracking, Ads Quality, And A Virtuous Cycle At Google

The NY Times has a profile of several individuals behind the scenes at Google trying to monitor and safeguard the company’s financial performance and fine tune accordingly. The piece focuses on Nicholas Fox, who’s a key member of the “ads quality” team, and Hal Varian, chief economist at Google.

What’s fascinating to me is the way in which Google’s desire to monitor how it’s performing as a company has taken increasingly sophisticated forms and how that monitoring and refinement has impacted the way it ranks ads on its system:

As measurements improved, Mr. Fox’s team unleashed a stream of experiments meant to optimize the ad system. They evaluated changes to things like the clickable area and background color of ads, and the criteria for placing ads above search results rather than beside them.

Over time, the company also looked beyond click-through rates to rank ads. Google now takes into account the “landing page” that the ad links to, and, for example, gives low grades to pages whose sole purpose is to show more ads. Soon, the loading speed of a landing page will also be considered, Mr. Fox said.

These factors contribute to an ad’s “quality score.” The higher that score, the less the advertiser has to bid to secure top billing. For example, an advertiser who offers to pay $1 per click to attract those searching for “vacation rentals in Colorado” may receive more prominent placement than another who bids $1.50 for the same query but has a lower quality score. An advertiser with a very low quality score may have to bid so much for placement as to make it uneconomical.

Quality scores work as an incentive to advertisers to improve their ads, which benefits users and, in turn, benefits Google, Mr. Fox said.

Perhaps maddening for competitors to watch, this is how Google can show fewer ads and make still more money.