Google’s Preferred AdWords API Pricing Model Equals Big Changes

Google announced Monday about upcoming changes to its AdWords API fees. This change has been a long-time waiting for many agencies that have often had a constant battle gaining respect from Google.

The Google API platform is structured to allow developers to interact with AdWords. This permits agencies to create their own bidding and reporting tools. Through these tools, agencies are able to automate keyword generation, ad text, dynamic URL’s and much more.  However, many of those enhancements have been limited because of the cost constraints.

The recent API announcement was buried with changes to Google AdWords Certification program on several Google blogs, including adwordsagency.blogspot.com.  Because of this, many may have missed the significance of this enhancement.  However, it wasn’t missed by agencies.

“We have, for more than two years, advocated for the removal of API fees with Google to encourage innovation and to even the playing field for end marketers who choose to utilize the services of agencies,” said Robert Murray, CEO, iProspect. “This isn’t an instant API fee removal for all agencies and technology providers. It sounds like this will be a six month process with rigid requirements that will require agencies to become fully certified, but it is absolutely a step in the right direction.”

Indeed, despite reports of eliminating fees, it’s not elimination right away, at least not a clear one.  Agencies have to pass several requirements in order to reach the “preferred” level. Google has setup a pricing path plan for agencies who want preferred AdWords API pricing. Parts of those requirements are directly related to Google’s recent changes to its AdWords Certification process. Because of these constraints, it does mean that several large vendors may not qualify for the free API pricing.

Google uses a unit pricing to measure API costs. Every API operation represents a certain number of units. Currently, Google charges 25 cents per 1,000 API Units (source.) Understandably, with thousands (or hundreds of thousands) of API calls, this can be very costly for software developers.

Agencies that are approved for preferred pricing receive 250 free units for every AdWords $1.00 that’s spent. As an example, managing $100,000 of spend in My Client Center equates to 25 million free API tokens for the following month.

If the change goes as fluidly as Google seems to indicate, it will be a relief for many agencies. This seemingly small change will set the stage for major changes to the AdWords community. Eliminating price constraints will lead to more development, innovation, and possibly open-source. Although imagining open-source development in the current AdWords arena seems impossible, it’s not a stretch to believe that it could happen.

“As Google moves closer to true real-time search results, real time optimization will be vital for complex campaigns,” said Murray. “For the technology platforms and the larger agencies, removing the cost barrier will become even more important, because we have more freedom to play in the Google Sandbox and create innovations for the industry.”

Another ripple effect of this change could affect the way in-house marketers manage AdWords. Coming from an in-house world, I was never satisfied with many of the bid management tools available. Thus, I manually managed all bidding options in-house. These new changes by Google will surely lead to improvements and enhancement to those tools.

It’s too early to tell how many agencies will qualify and ultimately be certified for these new, free API tokens. Like many of Google enhancements, we are at the “wait and see” stage.  Until then, agencies (and all of us) anxiously stand by for a chance to compete and innovate.

Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.

Related Topics: Channel: SEM | Features: Analysis | Google: AdWords | Google: APIs

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About The Author: is a frequent search industry speaker and blogger, although he has spent most of his career as an in-house Online Marketing Manager. Working from this perspective has provided John with an understanding of high demand and budget concerns as it relates to marketing. He can also be found at www.JohnWEllis.com and on Twitter @JohnWEllis

Connect with the author via: Email | LinkedIn



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