Big Changes In AdWords, And The Need To Instrument SEM Campaigns

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• Minimum Bids required to make keywords ‘active’ have been replaced by First Page Bid Estimates, meaning the bid required for an ad to show on the first page of search results.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.

• Chris Zaharias
• 1 response
•  Search Engine Marketing

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