Google Adwords – Tweaking All the Way to the Bank

Google announced on Monday that the Quality Score Improvements would be going live this week, with what they claim are tweaks which will benefit both advertisers and search users.

Well, they would, wouldn’t they!?

The changes, removing the ‘Inactive for Search Status’, real time ‘Quality Score’ and new ‘First Page Bid Estimates’ seem to me to be more about generating extra revenue than improving quality.

Even among those SEMs who work with AdWords for a living there is a lot of confusion about what is going on. A lot of the targeting improvements seem, well, arbitrary at best. For instance, here’s one of the search terms from an account I manage (click the image to enlarge):

It’s not ‘Great’, but a fairly solid 7/10 ‘OK’. Even some nice words of encouragement,

“What should I do?
Keep it up! Your keyword, ad text, and landing page quality are high.”

So, how is the ad performing? Let’s see:

Hmm, the ad is not showing. Must be the bid then, right?

Well, no:

Estimated bid to show on the first page:	$1.25	Based on the quality score below
Your bid:	$1.75	Max CPC

I have an keyword that is rated at 7/10, and I’m bidding 40% more than Google estimates I need to to be on the first page, and yet, “No Ad is Showing”.

No wonder people are confused.

If Google is not showing the ads, then they’ll lose money then. Well, I could be wrong, but I don’t think so.

I’ve been watching my keywords pretty closely this week to see what would happen, and Google’s main suggestion seems to be that I raise my bids. Funny that.

How about this one for instance:

That’s an exact match keyword, which fits the site perfectly, has a historically high click-thru rate and used to average less the $1/click. Google now says “Bid is below first page bid estimate of $25.00″. $25! And yet yesterday, it was in the 1.5 average position.

That’s an extreme one, but we’ve seen maybe 30-40% of our keywords being told they should raise the bid according to the first page bid estimate. If that is happening across other peoples’ accounts, and it appears that it is, then we are going to see the average cost of bids being pushed up. Nobody wants to be on the 2nd or, gasp, 3rd page of results.

I’ve been working with Pay Per Click ads for a good number of years now (hence the GoTo swag shown above), and I think we’ve been down this road before. This is why many people switched to Google AdWords from Goto/Overture in the first place, because the constant battle to be in the top spots drove the cost up and up. Google was a breath of fresh air. They really did reward quality instead of who has the deepest pockets. After all, if Ad1 was paying $1, and Ad2 only $0.50 but had 3 times as many clicks, then Google still made more money. Everyone was happy. That is why I’m worried about the potential bidding wars this may lead to.

Particularly if the Yahoo-Google deal is finalized and approved.

Maybe I’m wrong. It’s still very early days and these may just be some kinks which will have to be worked out. But given Google’s near monopoly and unwillingness to listen recently, I can’t say I’m overly optimistic.

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Are you an AdWords Advertisers? Let me know what you’re seeing or what you think.