In late August, Google informed the search world that changes were on the hori­zon for AdWords. In Sep­tem­ber, AdWords users were informed that the changes would be tak­ing effect, and since then the changes have been imple­mented.

To recap, the search giant has made sev­eral big changes to AdWords:

  • Qual­ity Score now being cal­cu­lated in real-time and for each spe­cific query. Prior to this change, Q.S. was cal­cu­lated across all queries on any given key­word the adver­tiser was bid­ding on, and in a batch process.
  • The ‘Inac­tive for Search’ des­ig­na­tion is no longer.
  • Min­i­mum Bids required to make key­words ‘active’ have been replaced by First Page Bid Esti­mates, mean­ing the bid required for an ad to show on the first page of search results.

Now, weeks into the “improve­ments” (as Google calls them), here’s how I see the changes affect­ing advertisers:

1. Qual­ity Score
It’s still rel­a­tively unclear what effect the more accu­rate Qual­ity Score is hav­ing on adver­tis­ers, though there has been no short­age of blogs buzzing with spec­u­la­tion. SEM Club­house expects real-time and geo-specific Q.S. cal­cu­la­tions to make adver­tis­ers’ accounts “more respon­sive to changes in ad copy, which in turn should make the accounts per­form bet­ter, quicker.” I agree, and if ever there was a rea­son for adver­tis­ers to imple­ment scal­able, data-driven test­ing & tar­get­ing sys­tems to opti­mize ad copy and land­ing pages, this is it.

2. Inter­ac­tive for Search
The removal of Inac­tive for Search has proven some­what frus­trat­ing, because deter­min­ing “key­words for­merly known as inac­tive” requires some guess­work. Do you iden­tify them by Qual­ity Score, impres­sion vol­ume, or some other means? In any event, though, adver­tis­ers are find­ing that pre­vi­ously inac­tive key­words are still get­ting lit­tle or no impres­sions, and thus the main effect of this change is that some adver­tis­ers are now pay­ing the First Page Min­i­mum Bid in an effort to get expo­sure for those keywords.

3. Min­i­mum Bids replaced by First Page Bid Esti­mates
This is par­tic­u­larly con­fus­ing. I spoke to a search mar­keter recently at a SEMPO event (who hap­pens to be a client) and she indi­cated that she has tested the first page bid and observed the following:

  • First Page Bid rec­om­men­da­tion was higher than the bid that had her in posi­tion 3 for key­word X.
  • Increas­ing the bid on key­word X to rec­om­mended bid caused a posi­tion increase (expected) — but also caused the First Bid rec­om­men­da­tion to increase (What!?) when she returned.

This phe­nom­e­non is being echoed on Web­mas­ter­world today.

Maybe this is tem­po­rary and Google is work­ing out the kinks, but every­one should be aware that the orig­i­nal fear of First Page Bid caus­ing adver­tis­ers to bid up or to bid on terms that were pre­vi­ously in low posi­tions on the first page or not appear­ing on the first page at all may be exac­er­bated by the fact that First Page Bid require­ments from Google are often­times higher than adver­tis­ers’ cur­rent bids — includ­ing in cases where the advertiser’s already on page 1 as in the case below.

The take­away for every­one is that these changes are sig­nif­i­cant. In order to stay com­pet­i­tive, adver­tis­ers should fac­tor in that the bid­ding envi­ron­ment may become arti­fi­cially more com­pet­i­tive in the short term. Like­wise, the real-time and geo-specific Q.S. cal­cu­la­tions will reward adver­tis­ers who test ad copy, land­ing page and offers against dif­fer­ent geo traf­fic seg­ments. Lastly, these changes should make it abun­dantly clear that Google is tweak­ing its AdWords sys­tem to try to increase mon­e­ti­za­tion in the face of a slow­down in the tra­di­tional dri­vers of search growth. Search query length, Click-Thru-Rate and # of key­words per adver­tiser have all peaked, forc­ing Google to turn its mon­e­ti­za­tion knob to 11. In that case, adver­tis­ers must respond by instru­ment­ing their own SEM cam­paigns with key­word man­age­ment and test­ing & tar­get­ing capa­bil­i­ties, or risk feel­ing an ROI drain from Google’s mon­e­ti­za­tion gain.

1 comments
Bill
Bill

My job is landing page optimization. I just received training last week on T&T. I would like to do keyword targeting, but I'm concerned about our quality score getting hit. I want to have a single landing page that swaps out the Mboxes with the "product" based on the keyword. So if someone searches for widget, I will have campaign copy in the Ad and T&T will offer the Mbox that has widget as the offer. According to Google we need to have Widget on our LP, but how could it if is offered through Javascript?