Early last century, Albert Einstein turned the world of established physics upside down when he introduced his theories of special and general relativity. Newton’s Laws, which had successfully driven the work of physicists for hundreds of years, were usurped by Einstein’s new theories.
At the heart of Einstein’s FIELD theories, which describe space-time, was his famous formula:
Okay, maybe you’ve never seen that before, but it is famous among theoretical physicists and cosmologists. The lambda, (Λ) is the cosmological constant, which we’ll touch on later in this article. Einstein’s most famous formula is, of course, E = mc2 which describes the conversion of mass to energy, as in that which happens in an atomic explosion.
It took the world of physics years to figure out what Einstein was even talking about, and then even more years for experts to work out whether he was right or wrong. As it turns out, Einstein was more right than wrong.
Google’s Grand Unification Theory Of Devices
In similar fashion, Google turned the world of paid search on its head last month when it unveiled Enhanced Campaigns, which I refer to as their Grand Unification Theory of Devices. Google’s stated purpose in pursuing the Grand Unification Theory is to create a new advertising universe where paid search campaigns are elegant and simplified, and where we can target all devices, bids, time and space from within a single campaign.
This theoretically perfect PPC universe is still young and unproven, but that has not stopped Google from creating it and implementing it before the end of the next fiscal quarter. Of course, they can do that; they’re Google. While Sir Isaac Newton and Dr. Albert Einstein had to content themselves with just describing the world around them, Google can change the way the PPC universe actually works.
Just as Einstein created his elegant equations to describe the grand workings of the cosmos, I thought it would be interesting to take a quick peek into some of the fundamental assumptions that Google must make in order for an Enhanced Campaigns universe to make sense, and express them as simple mathematical formulas.
This new universe operates differently than our current “Legacy” world, and I hope my math logic will help your understanding of what’s fundamentally changed. Making things simple isn’t always so simple, after all.
The Law Of Approximate Device Equivalence (LOAD)
To achieve simplicity and elegance in its new Enhanced campaigns, the first thing Google needed to do was get rid of all that pesky nonsense about campaign ROI performance being different on tablets than on desktop devices. Rubbish. How can anyone create simple campaigns if devices all perform differently?
Unless and until device performance could be proven to be equivalent, it would not be possible. This led to the necessity of inventing a new Law to describe device behavior in the new Enhanced Campaigns Universe, which I’ve named the big new Law of Approximate Device Equivalence, or I prefer to call it, the big LOAD.
Here is my equation that describes it:
According to the big LOAD equation, where rho (ρ), represents advertising performance, and ρ(t) represents performance of Tablets, and ρ(d) represents the performance of Desktop campaigns, Google has simplified the way things work by declaring that desktop and tablet advertising performance are equivalent, or at least close enough so that we need not concern ourselves with optimizing for them anymore.
Now, perhaps you are not a ‘math’ person, but you, as well as many advertisers, doubt that this can possibly be true. Perhaps you “just know” that tablets will perform differently than desktops. You see it for yourself in your everyday life. You see how tablets are replacing favorite magazines as something to browse through as you sit and watch the tele or enjoy a cocktail with your significant other. In the morning, whether traveling or at home, you see how tablets are starting to push newspapers off the breakfast table, and you ‘just know’ this can’t be true.
Or, maybe you are a data person, and claim to have “actual data” that confirms your suspicion about the veracity of Google’s big LOAD. Don’t fret, you are not alone. Even Google has data like this, and publishes it on its website like this:
Hmmm, you ask. Shouldn’t Google use its own data to challenge a fundamental assumption of Enhanced Campaigns? Well, let me ask you something. When was the last time you tried to create an online ad system? What? Never? Then don’t question the wisdom of someone who has. And, besides, the big LOAD equation does not work in a Legacy Campaign world, so stop whining and start converting. And don’t laugh, either. After all, didn’t Isaac Newton have to create new math before he could prove his three Laws?
The second controversial, and even more mysterious, aspect of Google’s Grand Unification Theory of Devices is that individual keyword bids on mobile are no longer useful. Instead, mobile bids will now be calculated as a function of desktop keyword bids as explained in this equation:
The Law Of Bidding On Mobile & Desktop Devices (BMAD)
Translated, this equation states that your mobile keyword bid amounts will vary as a constant function of your desktop bids:
It no longer matters how your mobile keywords actually perform on mobile devices, what matters now is how your desktop keywords perform on desktop devices.
In olden days, advertisers only had one economic model to apply to AdWords bidding calculations. That model was based on the premise that your keyword bid should be a function of your conversion-rate-performance for that keyword. Now, with BMAD, we have two models. We can use that old model for our desktop device campaigns, and the new BMAD model for mobile keyword bids.
Now, I know you are saying to yourself, “how can it be simpler to employ two models rather than one?” As I said earlier, creating simplicity isn’t all that simple. Does that help? Good. Read on.
To make working under two economic models more simple than working with one, and to make the BMAD economics viable in the first place, Google simply invented the Mobile Bid Adjustment Factor, or BMAF, for short.
The BMAF is a constant, a percentage ranging from -100% to 300% that you can set yourself at the campaign level, which automatically creates your mobile keyword bid as a percentage of your desktop keyword bid. And, to make things even easier, any time you change any of your keyword bids, the BMAD BMAF instantly changes your mobile keyword bids, too. You’re welcome.
Still skeptical? Why, you ask, should mobile bids change every time we change a desktop bid? Why should mobile bids vary based on desktop bids in the first place? These are good questions. Let me get back to you on that.
Did Google Get It Right With Enhanced Campaigns?
Putting aside the shaky assumptions underpinning Google’s new Enhanced Campaigns that I satirized above, the question of the day is: will Enhanced Campaigns work and will advertisers be happy with it? Will Google be happy with it? Will Mobile CPCs rise and improve Google’s net profits?
There are certainly a lot of questions to be asked, and answers to be discovered, and the topic will certainly dominate the blogoshpere for months to come.
We’ve started modeling the expected impact of merging campaigns, and so far, we can find no significant gains or losses in the cutover, and so, we are starting the conversion process for our smaller customers.
A few final thoughts and questions about Enhanced Campaigns. Anyone who wants to weigh in, including Googlers, please leave your comments at the end of this article.
First, why didn’t Google first change the way it handles the time of day reporting and accounting for clicks?
I’d have thought this would have been the very first part of any AdWords reorganization. As it stands now, we still have to bid for clicks based on the time zone of the account, rather than the time zone where the click actually occurs. So, for example, If you want to reach people during their lunch hour, it would take 3-5 different campaigns for the US alone.
Some of the exciting new features in Enhanced Campaigns, like geographical bidding and site link scheduling would be much more useful if AdWords campaigns were based on click location.
Second, Google’s Product Managers have learned that handling PR surrounding new platform releases is probably as important as the release itself. I am sure that Google PR teams were embedded with the development teams, because the minute the story broke, there were industry pundits all lined up to say nice things about the changes.
Google strategically ‘leaked’ info to hundreds of major account reps, writers and bloggers so that within minutes of the announcement, the Internet was full of positive spin, which drowned out the negative voices. Well done, Google Product Development and PR teams. I sure hope there is as much steak in this new rollout as there is sizzle.
Well, that’s all that’s on my mind for Enhanced Campaigns this month. Want to give a big shout out to my brother, Bob, for his help with the physics and math stuff. Helps to have a physicist in the family! Please comment below with your own thoughts and ideas on Google’s latest efforts.
Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.