From 3rd Party To 1st Party: The Evolution Of The Google Advertising Toolset

A year ago, I was firmly anti-Google. Not in the sense that I disliked Google — I just felt that Google did not provide the best tools in the business to analyze and make decisions on their own advertising placements.

When asked if an advertiser should consider a 3^rd party technology to help manage ad spend, I would undoubtedly say “yes” because Google Analytics, AdWords, and Merchant Center were (and remain) imperfectly bound systems requiring a lot of proprietary work to merge and make informed decisions.

Much has changed in the last year. Google has made some significant changes (PLA, rules-based and improved algorithmic bidding, attribution modeling, enhanced campaigns…), making it increasingly difficult to leverage third party tools to gain an advantage over free tools like AdWords and Google Analytics. Having been on the inside at a technology house and heavily involved in marketing third party technologies, this is a difficult reality to embrace.

I’m going to go through the historical pros and present realities of 3^rd party paid search technology platforms versus their free ad server counterparts (AdWords, Bing Ads, and Google Analytics). For the record, I have no personal bias toward or against particular technologies and all statements below are generalized toward the entire industry.

Tracking

One of the most blatant shortcomings in the Google tracking ecosystem has always been conversion tracking — AdWords conversion events and Analytics goals/e-commerce tracking.

AdWords Tracking Setup

The inability to create composite tracking events, parse conversions event types for bidding, or modify conversion data after the fact can be frustrating if you depend on AdWords or Google Analytics as the only means of tracking conversions for your marketing program.

Google Analytics Goal Setup

Third-party providers have stepped in to provide comprehensive and flexible tracking systems with deep integration capabilities. But, while it sounds nice in a pitch, complex tracking integrations are only relevant if you have complex tracking demands. Some businesses require complex tracking solutions such as composite metrics or latent conversion attribution; however, the reality is that most advertisers have simple advertising tracking demands – either a CPA (cost-per-acquisition) or ROI (return-on-investment).

AdWords, Bing Ads and GA all do a very good job with CPA and ROI. And, with a little legwork and a half-decent internal database, most tracking needs can be distilled down to a CPA: the average net present value of a conversion.

Bidding

Building on the relevance of simple tracking demands, at face value, AdWords offers a fairly similar tool set compared to even the most flexible 3^rd party platforms:

• AdWords
  • Manual CPC Bidding
  • Rules based bidding
  • Algorithmic rank based bidding
  • Algorithmic CPA based bidding
• 3rd Party Software
  • Manual CPC Bidding
  • Rules based bidding
  • Algorithmic rank based bidding
  • Algorithmic CPA based bidding
  • Algorithmic ROI based bidding

Without any additional analysis, the only way to manage to a performance metric in AdWords that’s not CPA is via rules — an option that has been around for years and refined via 3^rd party tools, but only a recent addition for AdWords.

As previously mentioned, any revenue-based metric can be distilled down to a CPA, and as the ad server, Google has a massive advantage over any other algorithmic bid management provider.

Consider the number of variables a 3^rd party system can leverage for bidding in AdWords: in the enhanced campaign environment there are 2 bids per keyword (Computer/Tablet & Mobile). If the platform is robust, it may offer up to 8 day-parts, making 16 possible bids per day per keyword.

On the other hand, AdWords conversion optimizer can manipulate bids for all three devices, across both Google.com and search partner networks per unique impression. That’s several orders of magnitude of variance in possible bids per day!

The most common argument against conversion optimizer is that it’s a black box – but so are 3^rd party platform algorithms. The inherent advantage of the ad server is too much to ignore.

Large Accounts

Prior to Enhanced campaigns, marketers had a clear incentive to segment campaigns by as many values as possible to best understand unique click and conversion behaviors by device, network, etc. Take a comprehensive account with 50 campaigns and break it apart by three devices (computer, tablet, mobile) and three operating systems (windows, mac/iOS and others), and you’ve got a 450-campaign behemoth that’s borderline unmanageable due to size constraints.

Accounts that get too big become extraordinarily difficult to manage and manipulate as even the simplest tasks require mind-numbing repetition leading to human error.

As a result, 3^rd party platforms are built around automated processes and scripted bulk changes evolved to bear the burden of repetition.

For better or for worse, Enhanced Campaigns force marketers to reduce that load back down to, in my previous example, 50 campaigns – effectively negating the benefits provided by the 3^rd party tool sets designed to streamline bulk processes.

Bing

With all this talk about AdWords, we can’t forget about Bing Ads. A fleshed out Bing Ads account can make up 15-25% of overall volume in a paid search effort, so it’s nothing to scoff at. While Bing Ads lacks the same feature-rich design of AdWords, it does offer a very capable on- and offline editor. With a little elbow grease and offline analysis, AdWords bidding practices can be incorporated into Bing Ads.

With no proprietary bidding technology, we cannot rely on an algorithmic conversion optimizer to set bids for us in Bing. Fortunately, the very same tool we use to identify goal CPAs can be modified to calculate goal CPCs.

Consider the following known formulas:

• CPA = Cost / Conversion
• CPC = Cost / Click
• Conversion = Conv Rate x Clicks

Doing some quick substitution:

• CPA = Cost / (Clicks x Conv Rate)
• CPA x Clicks x Conv Rate = Cost
• Cost / Clicks = CPA x Conv Rate
• CPC = CPA x Conv Rate

So, we can take calculated goal CPA (net present value AOV) multiplied by conversion rate to identify a goal CPC at a keyword level.

Concluding Thoughts

Third-party software solutions exist to fill in the gaps where proprietary software falls short. For many years now, tools like Marin Software, Kenshoo, Adobe Omniture, and countless others have delivered enterprise-level tool sets designed to make up for shortcomings in the AdWords and Google Analytics tracking and management systems.

But, with the bevy of recent updates and changes, these platforms are struggling to maintain the edge that has made the search technology industry relevant. Keeping up with AdWords/GA has become the primary objective. Google is laying down the challenge to yet another industry: add value or move on.