Google Adwords More Pricing BS
October 25th, 2007 by Michael Gray in GoogleIf you're new here, you may want to subscribe to my RSS feed. Read my top posts or learn more about Michael Gray. Want more frequent updates follow me on Twitter. Thanks for visiting!
Holy Cow Adwords you really have gone off the deep end with this one check it out
Today, we’d like to revisit a common misconception, about which we receive quite a few questions. In the first part of the post, we will very briefly cover the most important facts and in the second we’ll take a more detailed look at four related questions.
The common misconception: Many advertisers believe that if they have no competitors for a keyword, their minimum cost-per-click (CPC) will automatically be lowered by the AdWords system to $0.01, the lowest possible CPC.
How it actually works: The minimum CPC for a keyword is not related to the number of competitors one has that keyword. Instead, minimum CPC is dependent on the Quality Score of the keyword, as it’s used in the advertiser’s account. This functionality was introduced in August 2005, when keyword bidding evolved to a quality-based model.
So what we have is an auction based advertising system that has nothing to do with auction based pricing! Because you have no idea what goes into quality score you have no idea if Google is ripping you off or price jacking you. In yet another stroke of brilliance check this out
If you look for your ad and see no competitors, this does not necessarily mean that there are no others advertising on that keyword. For example, many advertisers choose to show their ads only during particular times of the day, so you will not necessarily see them when your ad appears. Or, while you might be targeting the entire United States, competing advertisers may be regionally targeting and not including the area in which you are located — in which case you’ll not see their ads.
So lets see I’m in New York and running geotargeted ad only in NY and my pricing is affected someone in California running a geotargeted ad only in California? Really can you say that with a straight face? Exactly how much alcohol was flowing at that staff meeting because you really can’t expect anyone to believe that a bunch of rational people reached the conclusion that was logical anywhere except the bizzaro universe. Just because housing prices in San Jose are going up doesn’t mean they are in every market across the country.
Why don’t you just come out and say listen we’re going to charge you whatever we want to, and there’s nothing you can do except pay it. At least I’d respect you for not lying to me.
Somebody put me on adwords quality score debate panel at conference … please the voice of reason needs to be heard …
Sphere It
October 25th, 2007 at 12:29 pm
No sh!t. I just quit trying Adwords is so rigged that its sad. I hate to say it but until some sort of regulating body that has some teeth starts to threaten them it will only get worse.
October 25th, 2007 at 12:38 pm
“Because you have no idea what goes into quality score you have no idea if Google is ripping you off or price jacking you.”
Despite your real good posts, I think you should know what goes into the Quality Score wolf, maybe not the exact measures, but like in SEO you should know what gives result even if you don’t know how much effort to put in…
what they are saying is that the main factor for quality score and CPC pricing is the quality of your ad (CTR) and of its landing page instead of simply competitivity. I think it’s good to know that Google is worrying about the quality of content instead of just leaving the world of internet marketing to the rules of capitalism and the strongest budget.
“So lets see I’m in New York and running geotargeted ad only in NY and my pricing is affected someone in California running a geotargeted ad only in California? Really can you say that with a straight face?”
They do not say that your pricing/CPC will compete with the other advertiser’s, but simply that he is also using those keywords in a different area…
I d gladly get on an AdWord panel sometime, I am going to SMX london but all seems to be prepared and ready!
October 25th, 2007 at 12:47 pm
I know it’s none of the BS they tell you like have a privacy policy or about us page.
October 25th, 2007 at 1:41 pm
“Why don’t you just come out and say listen we’re going to charge you whatever we want to, and there’s nothing you can do except pay it. At least I’d respect you for not lying to me.”
-Amen
October 25th, 2007 at 3:49 pm
Incredible. It reminded me of a post I read today on the Politics of Search: http://www.johnon.com/426/google-seo.html
October 25th, 2007 at 4:16 pm
I’m really ignorant of PPC and need to learn more. I’m not sure if this is scary or acceptable. After all, in an auction, there usually is a minimum bid that’s accepted. Isn’t that what Google is doing here?
I guess the part that’s disconcerting is that at least the auction lets you know what the minimum bid is!
No wonder why they are so wealthy!
October 25th, 2007 at 5:26 pm
Regulation isn’t what we want (you think *government* will help here??? Those bureaucrats who pay a fortune for a gold plated hammer??)
Competition is what we have to wait for
Seems like a bit of a long wait, though
October 25th, 2007 at 5:38 pm
To add to your great post:
If you run Adwords and Adsense on one site, you get charged for whatever Google thinks is right, and you get paid for whatever Google thinks is right.
I don’t want to complaint, but I wonder why so many people are always surprised by the success of Google’s stock. It’s a no brainer business in an intransparent market. All you need is some market research and optimization on how to attract and keep the most advertisers and publishers.
October 25th, 2007 at 8:57 pm
I’d join you on that panel if I could. I posted a LONG rant on my blog about the quality score debacle yesterday. By the way, I’m now a big fan of yours.
October 25th, 2007 at 9:58 pm
I can’t agree more. Google should weigh more feedbacks from webmaster sometimes.
October 26th, 2007 at 10:30 am
>> Regulation isn’t what we want
Orly? You think that blatantly lying to customers should be legal? They keep presenting this as an auction based system which it obviously is not. They keep saying its to improve the quality of ads which it obviously is not.
Take Michaels case or mine… we are both bidding on out names. In Michaels case he shares his name with someone famous so he has been hit with a surcharge. In my case that is not true, there are two people bidding on the name (including me), and everything is fine with my quality score.
The only thing wrong was that I wasn’t paying enough anymore on a phrase people rarely if ever search for. Isn’t that interesting…
Its as if Google is saying.. How much is this worth to you
Not very auction like to me… more like negotiating with a street vendor in Hong Kong.
October 26th, 2007 at 1:27 pm
If you are targetting the United States as a whole, then you will be competiting with anyone geotargetting smaller regions as you will under some searches be in the same bid auction.
I don’t think thats the case.
October 26th, 2007 at 1:37 pm
>For example, many advertisers choose to show their ads only during particular times of the day, so you will not necessarily see them when your ad appears.
So if I wanted to screw my competition I’ll raise my bids to some astronomical price have them run from 3am to 4am and they get affected all day … anybody else see a problem with that model … anybody notice who profits the most from it …
October 26th, 2007 at 2:15 pm
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October 26th, 2007 at 2:25 pm
Again, I don’t think thats completely the case, although I agree to some extent…
You wouldn’t be in the same bid auction at different times.
Although obviously because of the nature of a ‘quality’ based bid platform Google do take a average of all keyword performance accross the board which is factored within the algo and hence influences an advertisers actual cpc.
But at the same time for your example to work - You would have to of received clicks, spent a decent amount of cash, gained history and had very good CTR/performance to really truely influence anyone elses actual CPC running at a different time.
They are saying though -
We can hide behind the opaque nature of the bid platform and charge you what the fuck we like, yes I agree.
October 26th, 2007 at 4:30 pm
I think the first response is ok. They’re looking out for relevancy. A base price has to be set somehow. One base price across the board would be great for advertisers, but they’re in this to make some money too.
I agree with your interpretation on the 2nd response. If I’m bidding for ad inventory in New York and the time slot between 3am to 4pm, my bid shouldn’t be affected by bidders of other set of similar but different inventories.
October 31st, 2007 at 6:52 pm
This is really sad.
But actually I dont think that they will be able to stick to this policy for long. As soon as new competitors like Yahoo emerge and grow, they will need to make things like Quality Score more transparent. And convince the customers that their product is really the best & the most effective …
November 13th, 2007 at 9:44 am
Hi there,
Just stumbled upon your site, and I’m very surprised by some of the comments here.
I’m an account manager, looking after about 20 accounts for various clients in areas ranging from furniture to finance.
I have never had a problem with my minimum bids, and have found Google to be completely open and above board about how it’s calculated and what to do about it.
If you want a low minimum bid, you need a good Quality Score. To do this you need:
1. A good clickthrough rate (once the campaign’s been running a few days)
2. A relevant advert - ideally containing the search term (and dynamic keyword insertion doesn’t count!)
3. A respectable-looking landing page. Not just a pile of affiliate links, and a privacy policy/contact us/etc certainly has an impact.
Similarly, they explain very clearly why this happens (to reward campaigns that have relevant offerings, and penalise those that don’t), and how it’s used.
Then they adjust your bids using the Quality Score (e.g. if my QS is twice yours, I pay half as much to appear in the same place).
This is why it’s absolutely critical to understand and manage your Quality Score in order to optimise your campaign.
In the long run, Google would gain nothing by misleading its advertisers - they its source of revenue. On the other hand, they are obliged to promote relevant adverts in order to maintain their market position.
Steve Baker (aka CustardMite)
November 13th, 2007 at 9:50 am
I completely agree with you Steve! or should i say CustardMite… (by the way if you do like custard, make sure you visit our SEO blog apple pie and custard!)
Adwords keeps coming under fire in blogs, but most of the observations put out there are simply… wrong!
I believe Google is making ads as relevant as they can, and that can only benefit your client unless you are bidding on the wrong keywords!
Eloi
November 13th, 2007 at 10:06 am
Eloi & Steve,
I think we all realize that a good quality score is essential, but sometimes it’s not enough. I have seen firsthand that, contrary to what Google claims, a combination of keyword-to-ad relevancy, and high quality landing pages does not guarantee a good quality score. This happens because Google also uses historical keyword performance across the entire Adwords network to determine minumums. I’m happy to provide a real example of how one of my client extremely relevant terms got slapped with a high minimum. You can reach me via my blog - internetmarketingadvice-dot-net.
November 13th, 2007 at 8:16 pm
I have to agree with Jackie and webprofessor. I’ve managed hundreds of campaigns in Google AdWords, done plenty of tests and Google does some shady stuff behind the curtain of the algorithm. Quality score is nearly a subjective factor that doesn’t always represent true relevancy for ads. If you launch identical campaigns in 2 accounts or even 2x in the same account and test where the CPCs settle (not at the same time) they will not always have the same quality rating or the same min bid (even after months of letting the keywords settle and the same ads).
I’ve had instances of unparalleled relevancy; where the landing page URL matched the paid keyword, it contained the keyword in the copy (at least 2x in some cases), the display URL, as well as keywords in indexable landing page content and the CTR was around 18%…yet certain keywords could not receive a “great” rating to reduce the min bid value on specific general terms? Google reps were overwhelmed with evidence and really could not say why or what could be done. I have some odd instances logged after algorithm updates, as well as pre and post-quality score rating visibility bid changes for all types of sites. You learn after awhile that it is not really a fair playing field in the PPC game and the algorithm is really just a curtain.
The “Quality Score Rating” just gives Google more ammo to leverage against everyone. They are in business to make money…raising a min bid by even $0.01 on advertisers can be a goldmine. Misleading buyers is part of their business. It’s their game, their rules…we really don’t have much choice & they aren’t required to provide the answers to questions. You simply have to learn how to jostle the system to make the most out of it. There are other factors I haven’t seen listed above that play into your min bids that they don’t reveal, but definitely make for a huge difference as well.
Personally it’s retarded if AdWords blog is actually stating that you are being compared against those running in other regions and against ad scheduled competitors. I’ve never noticed that competition from regional campaigns…but if they stated this publicly then they are getting very irresponsible in maintaining the idea of a fair “auction-based” marketplace…of which has it really truly ever been one?